CitiGroup Accountable for Neglecting Customer Fraud Prevention as Per Court Order
In a lawsuit currently making headlines, Michael Zidell, a customer of Citibank, has accused the bank of negligence in failing to protect him from a $20 million crypto-related romance scam. The lawsuit, initially filed by New York Attorney General Letitia James on June 24, 2025, was not dismissed and is ongoing.
Zidell alleges that Citibank exhibited negligence by turning a blind eye to suspicious transactions and failing to alert or investigate these operations, despite clear warning signs. The scam involved a fake NFT investment scheme linked to a romance scam where an imposter gained Zidell's trust and persuaded him to invest in fraudulent NFTs.
The complaint ties the failure to the bank's statutory obligations under federal regulations designed to protect consumers, potentially including provisions under the Electronic Fund Transfer Act (EFTA). U.S. District Judge Paul Oetken has allowed James to litigate claims related to the EFTA.
Oetken's ruling states that Citibank's interpretation of the EFTA would contradict its intended purpose to protect consumers from advanced scams. James claims that scammers and con artists have stolen millions of dollars from Citibank's customers, and hopes the ruling will encourage banks to improve their efforts in protecting customers from fraud.
Citigroup has not publicly responded to the lawsuit as of the latest reports. However, the bank claims to have effective safeguards in place that prevent numerous transactions daily. The bank argues that it should not be held liable for customer losses if reasonable security measures have been implemented.
The lawsuit highlights rising concerns about banks' roles in preventing online crypto scams, especially "pig butchering" romance scams, where scammers build romantic relationships online to convince victims to invest large sums in fake crypto schemes. The case involves a second plaintiff who lost $35,000 after a message claiming her account was suspended and directing her to a scammer's phone number. Another plaintiff lost $40,000 from her retirement savings account due to a scam that appeared to be from Citi.
James's lawsuit against Citibank's subsidiary, Citibank, has not been dismissed. The lawsuit alleges that Citibank has failed to protect its customers from online scams, and the bank allegedly refused to reimburse the losses of the first plaintiff. The red flags James mentions include accessing an account from an unrecognized device.
As the case progresses, it will be interesting to see how the court rules on the matter and whether it sets a precedent for banks' responsibilities in protecting their customers from online fraud. The outcome could have significant implications for the banking industry and the way it approaches online security in the future.
- The ongoing lawsuit against Citibank, initiated by New York Attorney General Letitia James, contains accusations of negligence in the bank's business practices relating to protection from crypto-related crimes.
- The lawsuit, involving a romance scam and a fake NFT investment scheme, also covers claims under the Electronic Fund Transfer Act (EFTA), implying that Citibank may have violated federal regulations intended to safeguard consumers.
