Intricate User Interface in Software Cost Citibank $ 500 Million


A US court ruled that Citibank has no right to return the $500 million mistakenly sent to various creditors last August. As it turned out, the financial organization lost half a billion dollars due to the overly confusing user interface in the software.


According to Bloomberg, Citibank acted as an agent for Revlon, which owed hundreds of millions of dollars to various creditors. On August 11, the bank was supposed to send $ 7.8 million to these creditors. Revlon was in the process of refinancing its debt - paying off the money to several creditors while simultaneously transferring the rest of the debt into a new loan. This scheme is already quite convoluted, and, combined with the complex interface of the Flexcube banking software, led to the fact that the bank accidentally paid off the principal amount of the entire loan, most of which could not be repaid until 2023. As a result, instead of $ 7.8 million, Citibank sent almost $ 900 million to creditors.


Having discovered an error, the financial organization immediately sent appropriate notifications to its creditors. Some of them returned the money, but the rest refused to return, thereby depriving Citibank of $ 500 million.


Usually, early repayment of the loan is not a problem as the parties can simply negotiate a new loan on similar terms. But in this case, some of the lenders did not get along well with Revlon and Citibank.


Citibank has filed a lawsuit demanding that the money be returned as it was sent by mistake. Usually the law is on the side of the financial organization. Under New York State law, a person who sent an erroneous bank transfer, such as sending a payment to the wrong account, is entitled to receive the money back. However, the law provides for an exception when the debtor accidentally transfers money to the creditor. If the lender does not know in advance that the payment is wrong, it can be considered a loan repayment.


The court ruled that this exception works in the case of Citibank, despite the fact that the financial organization notified its creditors of the error that next day. According to the defendants, the amounts they received were exactly the same as the amounts owed by Revlon. This gave them reason to consider the payment as an early repayment of the loan.


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