User Error Leads to ‘One of the Biggest Blunders in Banking History’
February 23, 2021
A subcontractor’s failure to check the correct boxes has cost Citigroup more than $500 million. Now, a federal judge, calling the mistake “one of the blunders in banking history,” says they will not get the money back.
The costly mistake was made last summer. Citigroup intended to make a payment to creditors who held debt from the cosmetic company Revlon. Though they intended to make only a $7.8 million interest payment, they inadvertently paid the entire loan balance, which was nearly $1 billion and not due until 2023. Citigroup contacted the creditors within 24 hours, and while some returned the money, 10 others refused. Citigroup sued, but a federal judge ruled that the creditors had no obligation to return the funds.
A user interface expert who spoke to Business Insider examined the third-party payment system, noting that the mistake would be an easy one to make, as the interface is dated and not user-friendly.