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Citibank refused to reimburse scam victims who lost "life savings"

latchkey 3y ago
One of the large complaints about crypto currencies is that it is so easy to get scammed out of funds. Is traditional banking truly any better of an alternative?
- quantified 3y ago
  How many fiat-currency banks have executed a rug pull in the last 100 years?
  - latchkey 3y ago
    Too many to count. Silicon Valley bank was pretty recent. https://www.investopedia.com/what-happened-to-silicon-valley-bank-7368676 https://www.investopedia.com/what-happened-to-silicon-valley... I'm sure you'll respond "that isn't a rug pull", but that is just a play on words. At the end of the day, a failed bank is no different in the outcome. People lost funds due to mismanagement of other people's money.
    - pasttense01 3y ago
      No--from your article: "In the aftermath of the collapse, federal regulators promised to make all depositors whole, even for those funds that weren’t protected by the Federal Deposit Insurance Corporation (FDIC)."
      - latchkey 3y ago
        I wish I could downvote you because you didn't read the whole article and just cherry picked one single point. What happened is that the government bailed out the bank and the depositors. Why? Because "most of the accounts" were over the $250k limit and it would have been catastrophic to so many businesses that they couldn't ignore it. Contagion. Many were still left empty handed... "However, investors won’t be so lucky. While the FDIC can protect depositors from losses, it can’t do the same for shareholders and unsecured debt holders. In other words, individuals and institutions that owned stock in SVB Financial Group may not get their money back." Including us tax payers... "While you may not pay for the losses directly with your tax dollars, some losses could ultimately trickle down. For example, if your bank has to pay more for deposit insurance, it might charge you a higher interest rate on a loan or pay you a lower percentage of interest in your savings account." So yea, it was a giant rug.
    - quantified 3y ago
      Is that mismanagement a scam, though?
    - quantified 3y ago
      Is that mismanagement a scam, though? I mean, if you follow Bloomberg's Matt Levine, everything is securities fraud. Wells Fargo opening charge accounts recently, and openly proclaiming a strategy of asset theft during the real estate bubble of 2001-8, all the liar loans and the ratings agency frauds, those were scams. Not rug pulls. Your overall point is about scam, I think, and not the "put your money in as a retail investor and I will just freaking take it" case that is a rug pull. As a percentage of banking, I think the scam activity is low compared to crypto stuff but it really just takes data.
      - latchkey 3y ago
        > Is that mismanagement a scam, though? The leaders of that bank benefitted greatly from what was happening. > As a percentage of banking, I think the scam activity is low compared to crypto stuff but it really just takes data. Globally, crypto fraud is a fraction of banking fraud. Since crypto is global, I take that perspective. That said, here is one data point... you are welcome to keep digging. Mind you, the banking ones are only the frauds that are caught and public, and not actively being manipulated. https://www.justice.gov/opa/pr/jpmorgan-chase-co-agrees-pay-920-million-connection-schemes-defraud-precious-metals-and-us https://www.justice.gov/opa/pr/jpmorgan-chase-co-agrees-pay-...
protocolture 3y ago
So there has to be a point where the bank isnt at fault. Where you gave your OTC code to the guy anydesked to your PC and approved the transfer verbally. I dont know about the citibank case, but the Australian government is teasing laws that will make the bank 100% liable in all fraud cases, responsible for 100% refunds. The idea is that this will incentivise the banks to build idiot proof security. I think it would more likely incentivise them to only have non idiot customers.
- skhunted 3y ago
  Everyone is a idiot some of the time. No one is immune to making bad decisions. No one can be vigilant at all times. There’s no such thing as non idiot customers. There are people who make fewer bad decisions than the average/median but they still make bad decisions some of the time.
- seo-speedwagon 3y ago
  In two of the cases mentioned in the article, Citi approved multi-tens-of-thousand-dollar wire transfers from consumer accounts without getting positive confirmation from the customer. And in one case, the customer themself contacted Citi after clicking a sketchy link. That’s pretty egregious IMO.
  - fithisux 3y ago
    In Greece happens the same.
- arp242 3y ago
  There really should be a way to reverse transfers in cases of outright fraud. Fact is: this will keep happening. Due to a sufficiently sophisticated attack, a moment of inattention (or outright stupidity), or a combination of both. People losing some money is not ideal, but okay, that's been going on since forever, so okay. But people losing all their money after a sophisticated attack and/or a singular moment of stupidity? That doesn't seem reasonable.
  - 3y ago
mensetmanusman 3y ago
The likelihood that someone you know loses all their money is high!

One of the large complaints about crypto currencies is that it is so easy to get scammed out of funds. Is traditional banking truly any better of an alternative?

quantified 3y ago
How many fiat-currency banks have executed a rug pull in the last 100 years?
- latchkey 3y ago
  Too many to count. Silicon Valley bank was pretty recent. https://www.investopedia.com/what-happened-to-silicon-valley-bank-7368676 https://www.investopedia.com/what-happened-to-silicon-valley... I'm sure you'll respond "that isn't a rug pull", but that is just a play on words. At the end of the day, a failed bank is no different in the outcome. People lost funds due to mismanagement of other people's money.
  - pasttense01 3y ago
    No--from your article: "In the aftermath of the collapse, federal regulators promised to make all depositors whole, even for those funds that weren’t protected by the Federal Deposit Insurance Corporation (FDIC)."
    - latchkey 3y ago
      I wish I could downvote you because you didn't read the whole article and just cherry picked one single point. What happened is that the government bailed out the bank and the depositors. Why? Because "most of the accounts" were over the $250k limit and it would have been catastrophic to so many businesses that they couldn't ignore it. Contagion. Many were still left empty handed... "However, investors won’t be so lucky. While the FDIC can protect depositors from losses, it can’t do the same for shareholders and unsecured debt holders. In other words, individuals and institutions that owned stock in SVB Financial Group may not get their money back." Including us tax payers... "While you may not pay for the losses directly with your tax dollars, some losses could ultimately trickle down. For example, if your bank has to pay more for deposit insurance, it might charge you a higher interest rate on a loan or pay you a lower percentage of interest in your savings account." So yea, it was a giant rug.
  - quantified 3y ago
    Is that mismanagement a scam, though?
  - quantified 3y ago
    Is that mismanagement a scam, though? I mean, if you follow Bloomberg's Matt Levine, everything is securities fraud. Wells Fargo opening charge accounts recently, and openly proclaiming a strategy of asset theft during the real estate bubble of 2001-8, all the liar loans and the ratings agency frauds, those were scams. Not rug pulls. Your overall point is about scam, I think, and not the "put your money in as a retail investor and I will just freaking take it" case that is a rug pull. As a percentage of banking, I think the scam activity is low compared to crypto stuff but it really just takes data.
    - latchkey 3y ago
      > Is that mismanagement a scam, though? The leaders of that bank benefitted greatly from what was happening. > As a percentage of banking, I think the scam activity is low compared to crypto stuff but it really just takes data. Globally, crypto fraud is a fraction of banking fraud. Since crypto is global, I take that perspective. That said, here is one data point... you are welcome to keep digging. Mind you, the banking ones are only the frauds that are caught and public, and not actively being manipulated. https://www.justice.gov/opa/pr/jpmorgan-chase-co-agrees-pay-920-million-connection-schemes-defraud-precious-metals-and-us https://www.justice.gov/opa/pr/jpmorgan-chase-co-agrees-pay-...

protocolture 3y ago

So there has to be a point where the bank isnt at fault. Where you gave your OTC code to the guy anydesked to your PC and approved the transfer verbally. I dont know about the citibank case, but the Australian government is teasing laws that will make the bank 100% liable in all fraud cases, responsible for 100% refunds. The idea is that this will incentivise the banks to build idiot proof security. I think it would more likely incentivise them to only have non idiot customers.

skhunted 3y ago
Everyone is a idiot some of the time. No one is immune to making bad decisions. No one can be vigilant at all times. There’s no such thing as non idiot customers. There are people who make fewer bad decisions than the average/median but they still make bad decisions some of the time.
seo-speedwagon 3y ago
In two of the cases mentioned in the article, Citi approved multi-tens-of-thousand-dollar wire transfers from consumer accounts without getting positive confirmation from the customer. And in one case, the customer themself contacted Citi after clicking a sketchy link. That’s pretty egregious IMO.
- fithisux 3y ago
  In Greece happens the same.
arp242 3y ago
There really should be a way to reverse transfers in cases of outright fraud. Fact is: this will keep happening. Due to a sufficiently sophisticated attack, a moment of inattention (or outright stupidity), or a combination of both. People losing some money is not ideal, but okay, that's been going on since forever, so okay. But people losing all their money after a sophisticated attack and/or a singular moment of stupidity? That doesn't seem reasonable.
- 3y ago

mensetmanusman 3y ago

The likelihood that someone you know loses all their money is high!