10:13 AM EST, 01/22/2025 (MT Newswires) -- (Updates to include Citigroup's ( C ) response to MT Newswires in the fifth paragraph.)

Citigroup ( C ) banking unit Citibank's motion to dismiss a lawsuit by New York Attorney General Letitia James, which alleged the bank failed to protect customers from online scams adequately and refused to reimburse victims, was denied on its core claims by a federal judge in Manhattan.

US District Judge Paul Oetken ruled that Citibank must face charges of violating the Electronic Fund Transfer Act, or EFTA, and parts of three other claims.

James sued Citigroup ( C ) in January 2024, alleging that scammers exploited weaknesses in Citibank's security systems, stealing millions of dollars. James' lawsuit also claims that the bank misled customers about their rights following account hacks and stolen funds, while unlawfully denying fraud victims reimbursement.

James said the court's decision means EFTA can be "applied to unauthorized wire transfers made through Citi's consumer accounts."

"We are disappointed in this decision, as the industry-standard practices we employ have long been recognized as satisfying applicable law," Citigroup ( C ) said in a statement e-mailed to MT Newswires. "We are therefore evaluating next steps in the litigation."

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