Citigroup Lawsuit: Battle Over Consumer Protection

A lawsuit by New York Attorney General Letitia James against Citigroup claims that the bank failed to protect customers from online scammers and refused reimbursement. A federal judge denied Citigroup's attempt to dismiss the case, asserting that the bank must confront claims under the Electronic Fund Transfer Act.

A U.S. federal judge has dismissed Citigroup's bid to quash a lawsuit by New York Attorney General Letitia James, which accuses the banking giant of failing to protect its customers from online scams. The lawsuit alleges that Citibank neglected red flags that led to significant financial losses for its clientele.

Judge Paul Oetken ruled that the Electronic Fund Transfer Act was meant to defend consumers from complex fraud often facilitated by technologies that are beyond their understanding. Consequently, banks like Citigroup are in a stronger position to absorb such risks, according to the judge's decision.

The lawsuit, filed last January, highlights cases such as a customer losing $40,000 due to a phishing scam and claims the bank coerced customers into waiving their rights to reimbursement. Citigroup contends that while online fraud is a serious issue, their systems effectively catch numerous fraudulent attempts.

(With inputs from agencies.)