NEW YORK—In the wake of its mishandling—i.e. cancellation—of a business account that belonged to gay lifestyle website fabulis, Citibank has “updated and clarified” its procedures regarding internet business accounts. The new guidelines will continue to allow the bank to deny or close accounts for internet businesses that involve pornography or gambling.
The revisions come following Thursday’s apology to Jason Goldberg, the owner of fabulis, for closing a business account he had opened recently. According to the Wall Street Journal, Goldberg said he was told the account was closed because his website contained "objectionable content." The site, he said, "is a lifestyle business catering to gay men focusing on fashion, trends and culture." Currently, the site—which isn't even fully launched yet, and is about to go into beta—features videos of men explaining why they are fabulous.
“Mr. Goldberg, whose site fabulis recently received $625,000 in funding from investors led by The Washington Post Co., said in an interview that he opened a business account with Citi and deposited that seed money into the account last month,” continued the Journal. “Earlier this week, he said, he found himself unable to access the funds. He blogged about his experience, describing repeated conversations with Citibank staff in which he says they told him about a review process that found the content of his site was not in compliance with the bank’s policies.” Goldberg also told the Journal that the bank told him his site had mistakenly been labeled as pornography.
Saturday, Citibank posted the following statement to its online forum:
At Citibank, we have learned a great deal from recent customer issues related to Internet business accounts. Mistakes were made in some instances, in which we apologized and corrected the problem. These issues made it clear to us that the language in our branch procedures was not specific enough and left too much room for interpretation from one account to the next.
We recognized that we needed clearer and less subjective guidelines with regard to opening Internet business accounts. And there were clearly gaps in training and communications around these specific branch procedures. Based on all these learnings, we've taken action and this week we updated and clarified our procedures for opening all Internet business accounts.
Banks are required by law to conduct due diligence and understand the nature of business accounts. For Internet business accounts, we have made it clearer to our bankers what the due diligence process entails. For example, we will continue to reserve the right to decline or suspend an account if we find illegal or discriminatory content, or if the site involves gambling or pornography. Beyond that specific due diligence, however, we do not monitor or evaluate our customers' web content.
We are providing additional training in this area to ensure the procedures are uniformly and correctly followed. Also, our bankers are now required to have additional consultation with senior level banking executives when questions arise about these accounts before making any final decisions. This will help to avoid misunderstanding and subjective decisions, and promote greater consistency throughout the process. And we remain committed to working with our customers to try to resolve any issues.
As a global organization, we also recognize the power and promise of diversity. In that spirit, we reiterate Citi's commitment to serving customers, hiring talent and supporting a broad array of organizations that promote diversity. To learn more about our diversity efforts, please visit: http://www.citigroup.com/citi/citizen/diversity/index.htm.
These recent customer issues have been a useful learning experience for us. We again apologize for any misunderstandings that may have occurred. We are committed to improving every day and we're working to better serve our customers.
Not surprisingly, Goldberg is taking credit for forcing Citibank to change its policies.
“Bravo Citibank,” he posted to the fabulis blog. “You are now entering the modern era. Let’s see how you live up to it.
“Let me close this chapter by saying that this whole episode wasn’t about fabulis, it’s about the power of social media. fabulis was just the product. Social media was the platform. Thousands of tweets and voices of outcry got Citi to change its policies in less than 72 hours. Think about that. The Obama Administration can’t get the banks to change, but we can!
“p.s. If anyone in Congress needs some help with financial regulatory reform, give us at fabulis a call. We seem to have figured out how to get banks to change their ways.”