Citi is facing a racial bias lawsuit over allegations that the bank’s ATM fee waiver policies discriminated against customers who did not bank with nonwhite-owned institutions.
The plaintiffs, who do not bank with Citi, claimed in a lawsuit filed Friday in Fort Lauderdale, Florida, that the New York City-based lender unlawfully granted fee waivers to people using out-of-network ATMs only if their accounts were held at nonwhite-owned banks, thereby imposing fees on customers banking with non-minority-owned institutions.
The lawsuit alleges that the discrimination violated federal and state laws, and since July 2016, customers have been charged different ATM fees based on race.
“Citi intentionally discriminated against Plaintiffs and those similarly situated for banking with financial institutions owned by people of the wrong race,” the complaint said.
The plaintiffs are pursuing class-action status and unspecified punitive and compensatory damages.
Citi, for its part, said in an emailed statement to Banking Dive that it is reviewing the complaint.
“Citi has no tolerance for discrimination in any form, and we take allegations to the contrary very seriously,” the spokesperson said.
The Citi ATM Community Network, launched in July 2016, allows participating members, including the customers of community banks and nonwhite-owned financial institutions, to make cash withdrawals without a surcharge fee at Citibank branch ATMs. The program also waives any out-of-network fees the financial institutions may charge customers for using Citi ATMs in the Chicago, Los Angeles, Miami, New York, San Francisco and Washington, D.C., metropolitan areas.
Since the launch of the program, the $2 trillion-asset lender has removed these fees for around 440,000 customers and 28 institutions to “alleviate one of the biggest barriers to banking,” according to Citi’s website. Citi typically charges $2.50 per ATM withdrawal for out-of-network customers.
The lawsuit follows allegations made last year by the Consumer Financial Protection Bureau that the Wall Street bank engaged in discrimination.
The CFPB fined Citi $25.9 million in November over allegations that the bank intentionally discriminated against credit card applicants whom Citi identified as Armenian-American. The bureau said the bank denied applicants certain credit card products based on their surnames — whom Citi suspected to be of Armenian descent — from 2015 through 2021.
Though Citi agreed to the stipulations of the order, it neither admitted nor denied the allegations.
“Regrettably, in trying to thwart a well-documented Armenian fraud ring operating in certain parts of California, a few employees took impermissible actions,” Citi said in an emailed statement to Banking Dive at the time. “While we prioritize protecting our bank and our customers from fraud, it is unacceptable to base credit decisions on national origin.”
After an internal investigation, the lender took “appropriate actions with those directly involved in this matter” and established measures to prevent such conduct from happening again, the company said at the time.
