Citibank is defending itself against a wave of lawsuits and regulatory penalties, led by a New York Attorney General case over online wire fraud that is now before a federal appeals court and could reshape how banks nationwide handle scam reimbursements. The bank has also paid tens of millions in recent fines for internal-controls failures and credit discrimination, settled a multistate case over LIBOR manipulation, and been named in class actions ranging from robocalls to alleged prime-rate collusion.
New York Attorney General’s Wire Fraud Lawsuit
Attorney General Letitia James sued Citibank on January 30, 2024, in the U.S. District Court for the Southern District of New York, accusing the bank of failing to protect customers from online scams and refusing to reimburse victims.1NY AG. Attorney General James Sues Citibank for Failing to Protect and Reimburse Victims The complaint describes scammers who contact customers by text or phone, pose as bank representatives, and trick people into sharing security codes or clicking fraudulent links. Once inside a victim’s online banking, the scammers change passwords, consolidate money from multiple accounts, and wire the funds out.
According to the complaint, Citibank’s systems missed obvious warning signs: logins from unrecognized devices, unusual locations, rapid password changes, and wire transfers wildly inconsistent with a customer’s history.2NY AG. People of the State of New York v. Citibank, Complaint The lawsuit cites approved wires of $35,000 and $40,000 that bore no resemblance to the account holders’ normal activity. In one instance, the bank approved a second fraudulent wire after failing to reach the customer to confirm the first.
How Citibank Allegedly Denied Claims
The sharpest allegations concern what happened after customers reported fraud. The AG says Citibank required victims to sign “Affidavits of Unauthorized Online Wire Transfer” that omitted any mention of their rights under the federal Electronic Fund Transfer Act. By routing claims through those affidavits, the complaint alleges, Citibank treated the losses as commercial disputes under the Uniform Commercial Code rather than as unauthorized electronic transfers requiring reimbursement under federal law.2NY AG. People of the State of New York v. Citibank, Complaint The practical result, the AG says, was that Citibank could blame victims and deny their claims.
The complaint also alleges that Citibank representatives falsely told victims their accounts were secure and funds would be returned, failed to report fraud to law enforcement, kept customers on long holds, and refused to lock compromised accounts until the customer visited a branch in person.1NY AG. Attorney General James Sues Citibank for Failing to Protect and Reimburse Victims Consumer complaints to the CFPB about the bank’s wire-fraud handling nearly tripled between 2020 and 2022, according to the filing.
What the AG Is Seeking
The lawsuit claims Citibank violated the EFTA, New York General Business Law § 349, the state’s SHIELD Act on data security, and Executive Law § 63(12). It seeks restitution with interest for victims denied reimbursement over the six years before filing, a $5,000 fine per violation, disgorgement of profits, and a court order requiring stronger anti-fraud defenses and an independent audit of the bank’s fraud-claim handling.3Courthouse News Service. Citibank Loses Bid to Dismiss New York Fraud Lawsuit
Citibank responded publicly that banks “are not required to make customers whole when those customers follow criminals’ instructions and banks can see no indication the customers are being deceived,” and said it had implemented security measures that significantly reduced wire fraud losses.4Banking Dive. NY Attorney General Letitia James Sues Citi Over Fraud Claims
The EFTA Ruling and Appeal
Citibank moved to dismiss, arguing that wire transfers fall entirely outside the EFTA under 15 U.S.C. § 1693a(7)(B) and are governed instead by Article 4A of the UCC. On January 21, 2025, Judge J. Paul Oetken denied the motion in part, allowing the EFTA claim and most other claims to move forward.5FindLaw. People of the State of New York v. Citibank, N.A. The judge called the coverage question one of “first impression” and found that the consumer-facing portion of an online wire transfer, where the customer submits a payment instruction and the bank debits the account, is not shielded by the EFTA’s wire-transfer exclusion.6NY AG. People v. Citibank, Opinion and Order on Motion to Dismiss He also ruled that a fraudulent, unauthorized transfer request cannot be treated as one made “on behalf of” the consumer.
The CFPB initially supported this reading. In May 2024, it filed a Statement of Interest arguing that the initial debit of a consumer’s account through an online platform qualifies as an electronic fund transfer under the EFTA, even when the bank-to-bank leg is excluded.7CFPB. CFPB Statement of Interest, NY v. Citibank Under a new administration, the Bureau reversed course. On March 25, 2025, it moved to withdraw the filing, calling it “highly irregular and inappropriate” and saying it had tried to reinterpret the EFTA without going through required rulemaking.8Banking Dive. CFPB Withdraws ‘Inappropriate’ Filing in NY AG Suit Against Citi
Judge Oetken certified the ruling for immediate appeal and stayed the case in April 2025. The Second Circuit accepted review in September 2025 and heard oral argument on April 6, 2026; as of mid-2026, no decision has issued.9CourtListener. The People of the State of New York v. Citibank, N.A. Bank trade groups, including the American Bankers Association, the Clearing House Association, the Bank Policy Institute, and credit union associations, filed briefs supporting Citibank, warning of compliance burdens and reduced availability of consumer wire transfers.10The Clearing House. Industry Associations Submit Amicus Brief Supporting Citibank The Fifth Circuit, in Nazimuddin v. Wells Fargo, held in January 2025 that wire transfers are excluded from the EFTA, but did not consider the split-transfer theory the New York court adopted.11Adams and Reese. Does Regulation E Apply to Consumer Online Wire Transfers
What the EFTA Question Means for Consumers
Under the EFTA and Regulation E, banks generally must investigate unauthorized electronic transfers within ten business days, and consumer liability is capped at $50 to $500 depending on how quickly the fraud is reported. Under UCC Article 4A, which has traditionally governed wire transfers, losses generally fall on the sender. If the Second Circuit upholds the district court, banks nationwide would likely need to treat the consumer-facing portion of online wire transfers under Regulation E, meaning faster investigations, capped liability, and potential exposure for past claim denials.12Katten. Federal Court Finds Consumer Wire Transfers Are Subject to the Electronic Funds Transfer Act
Individual Wire Fraud Cases
The AG’s case rests on a broader pattern. ABC7 News in 2022 documented seven Bay Area Citibank customers who lost roughly $600,000 combined to unauthorized wire transfers involving SIM-swapping and remote-access impersonation. Customers said Citibank processed high-value wires without two-factor authentication.13ABC7 News. Citibank Fraud: Bay Area Customers Report Unauthorized Transfers
In a separate case, Scott Jacobson of Skokie, Illinois, won an arbitration award against Citibank after $121,000 was drained from a trust account through three fraudulent wires to Thailand in October 2021. The arbitrator found the bank failed to follow its own online funds-transfer agreement and ignored internal scam alerts, and awarded Jacobson the full $121,005 plus roughly $20,000 in interest and attorney fees in April 2024.14NBC Chicago. Skokie Wire Fraud Victim Wins Lawsuit Against Citibank
OCC Consent Order and $75 Million Penalty
In October 2020, the Office of the Comptroller of the Currency issued a Consent Order finding that Citibank had failed for years to maintain adequate risk management, compliance, data governance, and internal controls.15OCC. Citibank Consent Order, AA-EC-2020-64 Four years later, the OCC found the bank had not made sufficient progress. On July 10, 2024, it amended the order and imposed a $75 million civil money penalty for missed remediation milestones and violations tied to data quality and regulatory reporting.16OCC. OCC Assesses $75 Million Civil Money Penalty Against Citibank The Federal Reserve Board imposed an additional $60.6 million penalty on Citigroup Inc. the same day for the same underlying failures.17Federal Reserve Board. Citigroup Inc. Civil Money Penalty Consent Order The 2020 order remains in effect.
CFPB Order Over Armenian-Descent Discrimination
In November 2023, the CFPB ordered Citibank to pay $25.9 million, comprising a $24.5 million civil penalty and $1.4 million in consumer redress, after finding that employees in the Citi Retail Services unit systematically discriminated against credit card applicants of Armenian descent between 2015 and 2021.18CFPB. Citibank, N.A. Consent Order, 2023-CFPB-0013 According to the order, employees flagged applicants whose last names ended in “-ian” or “-yan,” particularly those in and around Glendale, California, subjected them to extra scrutiny, and denied applications. Employees used derogatory terms such as “bust outs” and “Armenian bad guys,” and supervisors instructed them to conceal the practice and give pretextual reasons for denials. The CFPB terminated the order in October 2025 after Citibank completed payments and corrective measures.19CFPB. Citibank, N.A. Enforcement Action
LIBOR Multistate Settlement
In June 2018, Citibank agreed to a $100 million settlement with 42 state attorneys general, led by New York, over allegations that it manipulated the London Interbank Offered Rate. States accused the bank of making false LIBOR submissions to protect its reputation and benefit its derivatives trading, causing losses for governmental entities and nonprofits holding LIBOR-linked instruments.20Nebraska Attorney General. AGO Announces $100 Million Multistate Settlement with Citibank Of the total, $95 million went to restitution for eligible counterparties, with the remainder covering investigation costs and fees.21Virginia Attorney General. Citibank Settlement Agreement
Robocall Class Action
In Head v. Citibank, N.A., Citibank agreed to a $29.5 million settlement to resolve claims that it placed unauthorized prerecorded robocalls to cellphones belonging to people who were not Citibank customers or authorized users, in connection with past-due credit card accounts. The class covers calls made between August 2014 and July 2024. Eligible members receive a pro-rata share, capped at $2,500 per claimant unless they document receiving more than five such calls.22ClassAction.org. Head v. Citibank, N.A. Settlement Agreement
Prime Rate Price-Fixing Class Action
In October 2025, Citibank was named as a co-defendant with JPMorgan Chase, Bank of America, Wells Fargo, U.S. Bank, PNC, and Truist in a class action filed in the U.S. District Court for the District of Connecticut. The complaint, Normandin v. JPMorgan Chase Bank, alleges the banks conspired to fix consumer loan interest rates by pegging their prime rates at exactly 300 basis points above the Federal Funds Target Rate, inflating the Wall Street Journal Prime Rate and the cost of variable-rate consumer loans such as home equity lines of credit and credit cards.23Scott+Scott Attorneys at Law. Scott+Scott Files Lawsuit Against Major Banks Over Prime Rate Price-Fixing The case is in its early stages.