Judge Tosses $4M Romance Scam Suit Against Citibank
By CU Today Staff —
NEW YORK—A federal judge in New York has dismissed a lawsuit accusing Citibank of ignoring warning signs that allowed scammers to steal nearly $4 million from a Texas man's family trusts in a cryptocurrency romance scam, ruling the bank did not owe the customer the broad duty alleged in the complaint, Law360 reported.
The decision ends a case stemming from an alleged fraud in which the plaintiff said he was manipulated through social media into transferring trust assets into accounts connected to a fraudulent nonfungible token (NFT) investment scheme, according to Law360.
The plaintiff alleged Citibank failed to detect numerous red flags surrounding the wire transfers and should have intervened before the funds were moved to accounts controlled by the scammers. However, the judge concluded that the complaint failed to establish that Citibank had a legal obligation to investigate or block the authorized transfers based solely on suspected fraud indicators, Law360 reported.
The ruling reflects the increasingly difficult legal path facing victims seeking to hold financial institutions liable for so-called "authorized push payment" scams, in which customers voluntarily initiate transfers after being deceived by criminals. Banks generally argue they are required to execute properly authorized payment instructions absent clear evidence of unauthorized activity, while plaintiffs contend institutions should be liable when obvious warning signs are ignored.
Romance scams tied to cryptocurrency investments have become one of the fastest-growing fraud schemes in recent years, with fraudsters using social media and dating platforms to build trust before persuading victims to send money to purported digital asset investments that ultimately prove fraudulent. The Citibank decision is the latest court ruling addressing where responsibility lies between financial institutions and customers in combating increasingly sophisticated social engineering scams, Law360 noted.
Originally reported by CU Today.