New York state's attorney general's office said Tuesday it sued Citibank for its alleged failure to protect customers from electronic fraud and to reimburse victims for millions of dollars in losses.   

New York Accuses Citibank of Failing to Protect Customers From Fraud

In the lawsuit filed in Manhattan federal court, Reuters reported that Attorney General Letitia James alleged that Citibank's inadequate security protocols provided scammers with easy access to users' accounts, enabling them to execute unauthorized wire transfers and pilfer deposits.

In response to the legal action, a Citibank spokesperson said the bank had implemented measures to enhance security, significantly reducing wire fraud incidents. The spokesperson noted that Citibank had adhered to all relevant laws and regulations about wire transfers.

The spokesman emphasized that banks are not obligated to compensate clients when those clients follow instructions from criminals, and the financial institutions see no indication that the clients are being deceived.

James' lawsuit seeks various remedies, including the disgorgement of profits, a $5,000 fine for each instance of alleged law violation, and the appointment of a third-party monitor to identify all customers who were harmed.

READ NEXT: Citigroup to Close Down Global Distressed-Debt Business: Here's What to Know

Citibank Customers' Fraud Reports

The lawsuit highlights instances of customers reporting fraud and facing prolonged telephone holds, with assurances from Citibank staff that reimbursement would occur, despite the bank allegedly taking no immediate action to recover the funds. 

The legal action cites specific cases, such as one customer who had $40,000 stolen from her retirement savings account in 2021 after interacting with a text message link that seemed to be from Citibank.

Another customer lost $35,000 after responding to a message on her online account, claiming her account was suspended. That message also told her to call a phone number, leading her to speak with a scammer who changed her online passwords, executed account transfers, and stole the $35,000. 

READ MORE: Citigroup's Plan to Set up Securities Business in China Faces Delay