A decision that can be described as strange and homophobic was taken by Citibank officials yesterday, February 24, 2010, regarding the bank account of the New York-based startup Fabulis. Their funds were blocked without any notice to the client, after a few days earlier, a bank official decided that the website's blog page contained posts featuring “objectionable content.”
The bank will surely be cited in a civil lawsuit pretty soon, but until then, the ridiculous of the situation has climbed to greater heights, Fabulis management desperately contacting the bank to lift up the block, and only receiving a pink slip until Thursday when another bank official will re-review the blog's content.
Fabulis, far from being an Internet troublemaker, can be best described as a social network and lifestyle website dedicated to men of a certain orientation. While the service is still in development, the website and the blog feature harmless video and written content mainly uploaded by their users to YouTube. Some “coming-out” videos, free T-shirts and video blogging sessions can hardly be categorized as anything than usual social-network content, found on every other social media platform.
Jason Goldberg, Fabulis Founder and CEO, had this rant posted on the website's blog about the Citibank debacle: “So, what gives? [...] When did Citibank start reviewing blogs to decide who can bank with them? […] I promise you that if we do not get a good response to this on Thursday we are moving our bank account to a bank that respects and appreciates our business.”
With seed funding at around $625,000 from Washington Post and Venture Partner, Mr. Goldberg was still mad when he gave an interview for Hacker News a day later about the same incident, revealing more details, “Do I think Citibank or Citigroup is a homophobic malicious company? No. Do I think some compliance officer is a moron who made a really stupid decision? Yes. Three hours of trying to sort this out provided even more comedic insanity than I even revealed on the blog post. Including a bank manager who didn't want to talk about this because she was uncomfortable talking about the content of our blog over a recorded phone conversation. Oh, and we've learned that the account was marked to be canceled by [the] compliance officer for this ‘objectionable content.’”
Mark Maunder, an Internet analyst, friend of Mr. Goldberg, provided a more insightful opinion on what could have triggered Citibank's action in the first place, blaming the difficult economic conditions, which forced bank employees in guerrilla tactics.
“I’m curious why a bank would think they have the right to block a depositor’s access to their own funds based on that bank's own moral judgment. Unless I’ve misunderstood the facts, this sets a very dangerous precedent. Banks are highly motivated to hold on to your money as long as possible. If they have this power, it is very profitable for them to use it because they earn interest on your money every additional day it stays in your account. Ever heard of the overnight rate?” said Mrs. Maunder on his blog.
Citibank Blocks Startup's Funds Due to Objectionable Content
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