These days, most of us don't bother to carry cash around. Instead, we rely on our banks to keep everything squared away while we access our funds through cards and other technology. Unfortunately, this type of trust is throwing trouble some people's way as they report experiencing recent issues with major institutions. Read on to discover more about the Citibank customers who claim their accounts were closed without warning.
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Customers in California say their accounts were closed without warning.
ShutterstockMary Smbatian, a residential loan broker from Encino, California, recently told the Los Angeles Times that when she first started hearing rumors a few years back that Citibank was closing the accounts of Armenian Americans in the San Fernando Valley, she never thought that it could or would happen to her. But despite having been a customer for over a decade, she got a letter from the institution on Feb. 1, 2022, about just that.
According to Smbatian, the letter informed her that all of her accounts and cards with Citibank were being closed without giving any reason why. The Encino resident had both company and personal accounts, as well as credit cards issued through the bank.
"This was a mess. This was horrible. This was so depressing," she told the news outlet. "I was so stressed out, I literally started crying."
Karl Asatryan, a real estate agent and developer, told the Los Angeles Times that he also received a letter from Citibank last May informing him that his accounts would be closed in 30 days. Like Smbatian, Asatryan said he was given no reason why the bank was closing his accounts, after having been a client of theirs for around 20 years.
"That’s disrespect toward the customer," he told the news outlet. "And for a customer like myself, that’s ridiculous."
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They're now filing a lawsuit against the bank.
ShutterstockBoth customers suspect that their accounts were closed because of discrimination. Smbatian and Asatryan are now the lead plaintiffs in a proposed class-action lawsuit filed on Nov. 17 in Los Angeles federal court against Citibank for discriminatory practices, according to the Los Angeles Times.
Attorney Tamar Arminak, whose Glendale firm filed the lawsuit, told the news outlet that she has signed up more than 100 clients who want to participate in the class action suit, which seeks to compensate the plaintiffs due to losses suffered from alleged injustices, including damage to credit scores and financial hardships. She said clients have told her that they had checking, savings, business, and store accounts closed without reason, and their money was tied up for weeks or months as a result.
The damage done to Citibank customers is "very significant" based on what the firm is hearing from their clients, according to Arminak. "It really wrecked them," she said.
This is not the first time Citi has been accused of discrimination.
iStockThis issue goes back further than the new lawsuit, however. On Nov. 7, Citibank signed a consent order with the Consumer Financial Protection Bureau (CFPB) agreeing to pay $25.9 million in fines for alleged violations of fair lending laws, the Los Angeles Times reported. The CFPB claims that from 2015 to 2021, the bank discriminated against store-branded credit card applicants they suspected were of Armenian descent based on their surnames.
According to the agency, Citibank suspected that these applicants would be more likely to commit fraud and not pay their charges—with some of the bank's employees even referring to them as "Armenian bad guys” or the “Southern California Armenian Mafia."
As a result, Armenian Americans were subjected to high scrutiny and many were turned down or had their accounts randomly closed. The CFPB also found that the bank took "corrective action" against employees who failed to identify and deny these specific applicants.
But now, the suit led by Smbatian and Asatryan alleges that Citibank's discriminatory practices caused greater harm than what was even detailed in the CFPB's order.
"People suffered far more than a Macy’s account not being approved,” Arminak told the Los Angeles Times. "And I don’t think the fine addresses the humiliation involved."
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The bank has issued an apology to applicants who were "evaluated unfairly."
ShutterstockBest Life has reached out to Citibank about the new lawsuit from customers who say their accounts were closed without reason, and we will update this story with their response.
But in response to the Los Angeles Times report, the bank directed the news outlet towards a statement it had previously issued about the CFPB settlement where it did not deny or admit to any of the agency's findings.
"Regrettably, in trying to thwart a well-documented Armenian fraud ring operating in certain parts of California, a few employees took impermissible actions. While we prioritize protecting our bank and our customers from fraud, it is unacceptable to base credit decisions on national origin. We sincerely apologize to any applicant who was evaluated unfairly by the small number of employees who circumvented our fraud detection protocols,” Citibank said in its previous statement, per the Los Angeles Times.
