Malia Lazu

Let’s be clear at the outset: the banking industry has had its share of reputational blunders over allegations of racial discrimination.

For example, in 2011 Bank of America was hit with a $335 million penalty because of accusations of predatory lending by Countrywide Mortgage, which it bought in 2008. BofA denied that it practiced racial discrimination, but paid up.

“Banking While Black” incidents still happen, too, revealing the bias in the system. In January 2022, Ryan Coogler, who directed Black Panther, was arrested in a BofA branch in Atlanta for trying to withdraw $12,000 from his own account. To be discreet, Coogler wrote a note on a deposit slip and asked the teller to count the money in another room. The teller and her manager thought Coogler was trying to rob or scam the bank and called the police.

This time, though, the latest headlines put the spotlight on Citigroup, with a lawsuit that accuses the bank of racial discrimination – and it’s a complete farce. The problem, however, is that it may pressure financial institutions to rethink their policies and practices meant to be inclusive, especially of customers of minority-owned banks and community development credit unions.

Lawsuit Targets ATM Fees

The suit, filed by plaintiffs represented by conservative law firm Consovoy McCarthy, alleges that the plaintiffs had to pay out-of-network fees at the bank’s ATMs in Florida, while customers from minority-owned financial institutions are not charged those fees. The federal lawsuit, filed in May in Fort Lauderdale, claims the bank’s policy violates federal and California law.

In other words, “anti-woke” hit the ATM.

It’s hard to believe that someone randomly walked up to a Citi ATM, withdrew money from their account in another bank, and got so riled up over an out-of-network ATM fee (usually about $2.50) that they filed a lawsuit alleging discrimination. This lawsuit, which is seeking class action status (and a nice piece of business for that conservative law firm), is beyond frivolous.

The allegations, according to the lawsuit, is that Citi’s “express policy” charges customers “different ATM fees based on race … [and] imposes this fee only when a customer withdraws money from a financial institution owned by people of the wrong race.”

The wrong race? The court should throw out the suit on that wording alone!

But this language points out that the real issue here is not the ATM fee, but the fact that a large financial institution is trying to help individuals who bank with institutions that do not have large ATM networks.

Part of Citibank’s Equity Pledges

On its website, under the headline “Expanding Banking and Access to Credit in Communities of Color,” Citi makes several pledges to help minority depository institutions (MDIs) and their customers.

For example, one such promise is to provide MDIs with “up to $50 million in growth capital to strengthen their ability to serve racially diverse households and entrepreneurs.” Another is offering “pro-bono technical assistance and training to MDIs,” aimed at helping them address “the changing economy, improve operational efficiencies and support talent development.”

And then there is this one: “Alleviate one of the biggest barriers to banking by expanding the Citi ATM Community Network program that removes out-of-network fees at Citibank ATMs for customers of participating minority-owned banks and community development credit unions. Since 2016, Citi’s U.S. Consumer Bank has removed these fees for 440,000 customers and 28 institutions.”

“Since 2016”: Another red flag there. It’s only a theory on my part, but perhaps these “outraged” non-Citi ATM users had to wait eight years for the anti-woke sentiment to gather enough momentum to file their suit.

Don’t Let Pushback Derail Your Efforts

This theory has weight when we consider that Consovoy McCarthy also represents Students for Fair Admissions, which challenged affirmative action in college admissions at Harvard and the University of North Carolina. Now it’s taking on the West Point Military Academy in a suit that seeks to block the use of a “loophole” in the Supreme Court’s opinion to consider the race of those who apply to West Point.

Are you seeing the trend here?

Law firms like Consovoy McCarthy will not stop, given the current political and social climate. And, as the saying goes, they’ll get their day in court.

But firms like Citibank can stand tall in their policies that seek to improve equity and access in banking. If that means eliminating all ATM fees (and improving financial inclusion in the process) then so be it.

There’s a lesson for all of us here, in Boston’s financial and development community. Every practice that seeks to empower and include more people, especially those from underrepresented communities, could face more scrutiny.

We can’t stop the Consovoy McCarthys of the world from filing suits wherever they believe there is a chance to chip away at the gains made in diversity, equity, and inclusion. But we can stand strong, on the side of fairness and inclusion.

Malia Lazu is a lecturer at the MIT Sloan School of Management, CEO of The Lazu Group, former Eastern Massachusetts regional president and chief experience and culture officer at Berkshire Bank and the author of “From Intention to Impact: A Practical Guide to Diversity.”