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Citigroup Calls for Dismissal of New York Lawsuit Over Online Scams
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Citigroup Inc.’s (C - Free Report) lawyers pleaded to Paul Oetken, a U.S. District Judge, to dismiss the lawsuit filed by New York Attorney General Letitia James. The lawsuit accuses C’s subsidiary, Citibank, of failing to reimburse customers for online scams.
This news was first reported by Bloomberg News on Tuesday.
Brief Details on Citigroup’s Lawsuit
The lawsuit was initiated in January 2024 by Letitia James claiming that Citibank's inadequate security measures allowed scammers to infiltrate customer accounts easily and steal their deposits through unauthorized wire transfers.
Letitia James stated that "Citi's negligence" had led customers to lose millions of dollars in this scam.
Citigroup’s Response to the Lawsuit
Citigroup’s lawyers argued that the company has strong and extensive procedures to protect its customers from getting scammed into making fraudulent transfers.
A spokesperson from Citigroup stated, "Citi closely follows all laws and regulations related to wire transfers and works extremely hard to prevent threats from affecting our clients and to assist them in recovering losses when possible.”
In April 2024, Citigroup urged a federal judge to dismiss the lawsuit, claiming that the company has followed the standards set forth by the Uniform Commercial Code, which governs banking practices in the United States. Citigroup argued that the code allows exceptions to banks that have implemented commercially reasonable security measures in good faith, thereby freeing them from liability for losses incurred due to fraudulent activities.
On Oct. 1, 2024, the Federal Reserve terminated a decade-long enforcement action against C, which was filed over weaknesses in the bank's anti-money laundering (AML) practices.
The concerns related to insufficient controls and risk management practices pertaining to the Bank Secrecy Act and AML requirements were first raised in March 2023 by the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency. The enforcement action did not include any fine and was filed against Citigroup and its subsidiaries, Banamex and Citibank N.A., related to concerns about its compliance with AML regulations.
Finance Companies Facing Legal Troubles
In October, The Toronto-Dominion Bank’s (TD - Free Report) U.S. broker-dealer unit, TD Securities USA, agreed to pay more than $20 million in a settlement with U.S. authorities over allegations of manipulations of the U.S. Treasuries market.
TD was charged with a failure to supervise the head of its U.S. Treasuries desk. Between April 2018 and May 2019, the employee entered orders that he did not intend to execute, creating an appearance of a false demand, known as spoofing, to trade at better prices.
Wells Fargo & Company (WFC - Free Report) faced a class-action lawsuit last month, where it was accused of underpaying interest to clients participating in its cash sweep program.
The lawsuit alleged that WFC did not pay enough interest on uninvested cash while making a significant profit from these funds, leading to substantial financial loss for its clients.
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Citigroup Calls for Dismissal of New York Lawsuit Over Online Scams
Citigroup Inc.’s (C - Free Report) lawyers pleaded to Paul Oetken, a U.S. District Judge, to dismiss the lawsuit filed by New York Attorney General Letitia James. The lawsuit accuses C’s subsidiary, Citibank, of failing to reimburse customers for online scams.
This news was first reported by Bloomberg News on Tuesday.
Brief Details on Citigroup’s Lawsuit
The lawsuit was initiated in January 2024 by Letitia James claiming that Citibank's inadequate security measures allowed scammers to infiltrate customer accounts easily and steal their deposits through unauthorized wire transfers.
Letitia James stated that "Citi's negligence" had led customers to lose millions of dollars in this scam.
Citigroup’s Response to the Lawsuit
Citigroup’s lawyers argued that the company has strong and extensive procedures to protect its customers from getting scammed into making fraudulent transfers.
A spokesperson from Citigroup stated, "Citi closely follows all laws and regulations related to wire transfers and works extremely hard to prevent threats from affecting our clients and to assist them in recovering losses when possible.”
In April 2024, Citigroup urged a federal judge to dismiss the lawsuit, claiming that the company has followed the standards set forth by the Uniform Commercial Code, which governs banking practices in the United States. Citigroup argued that the code allows exceptions to banks that have implemented commercially reasonable security measures in good faith, thereby freeing them from liability for losses incurred due to fraudulent activities.
On Oct. 1, 2024, the Federal Reserve terminated a decade-long enforcement action against C, which was filed over weaknesses in the bank's anti-money laundering (AML) practices.
The concerns related to insufficient controls and risk management practices pertaining to the Bank Secrecy Act and AML requirements were first raised in March 2023 by the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency. The enforcement action did not include any fine and was filed against Citigroup and its subsidiaries, Banamex and Citibank N.A., related to concerns about its compliance with AML regulations.
Finance Companies Facing Legal Troubles
In October, The Toronto-Dominion Bank’s (TD - Free Report) U.S. broker-dealer unit, TD Securities USA, agreed to pay more than $20 million in a settlement with U.S. authorities over allegations of manipulations of the U.S. Treasuries market.
TD was charged with a failure to supervise the head of its U.S. Treasuries desk. Between April 2018 and May 2019, the employee entered orders that he did not intend to execute, creating an appearance of a false demand, known as spoofing, to trade at better prices.
Wells Fargo & Company (WFC - Free Report) faced a class-action lawsuit last month, where it was accused of underpaying interest to clients participating in its cash sweep program.
The lawsuit alleged that WFC did not pay enough interest on uninvested cash while making a significant profit from these funds, leading to substantial financial loss for its clients.