Fabulis: Citibank Shuts Down 'Objectionable' Gay Website's Bank Account
Update 5:54 PM ET
Jason Goldberg, the CEO of fabulis, says that Citi issued "a good and sincere apology" to the company this afternoon. Here's an excerpt from the apology letter:
Whatever statements that were made by any Citi representative related to the content of your website were inappropriate and made in error, and I will review in detail what happened. You have my firm commitment on this point.
Now, Goldberg has one last issue to resolve: will fabulis keep its account at Citi or move its money somewhere else?
Update 3:46 PM ET
The CEO of fabulis reports that Citi has retreated from its request that the web start-up terminate its account at the bank. The three Citi employees who each separately told fabulis that the account was blocked because of "objectionable" material on its website were all, Citi now says, mistaken.
The founder and CEO of a new travel network for gay men says that Citgroup froze his start-up's bank account after reading what Citi called "objectionable content" on its blog.
According to Jason Goldberg, the Stanford MBA who runs the start-up website fabulis, Citibank didn't contact him to explain the situation, and he discovered that the company's cash account had been blocked only by chance a few days later. When he called to complain, Citi agreed to "temporarily lift" the freeze pending a "re-review" of the site today.
Citi's move seems like the kind of embarrassing blunder that would send any other huge corporation into an apologetic frenzy. But when Goldberg spoke with a bank representative again this morning, he was told that the compliance department was sticking with its initial decision. The follow-up review, Citi said, indicated that fabulis.com's "content was not in compliance with Citibank's standard policies."
Setting aside the question of whether it's appropriate for a bank to freeze and then shut down an account based on a moral judgment, it's not obvious what could possibly be "objectionable" about fabulis.com's blog. The site, which has already raised over $600K from a number of notable investors including The Washington Post, so far features only PG-rated -- and very charming -- home videos of men describing why they're "fabulis." No pornography or profanity appear on the website, and the only subversive element of the social network seems to be that it's geared toward gay people.
According to start-up entrepreneur Mark Maunder, it's not implausible that Citi could be specifically targeting the gay community:
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?
One might speculate that this is a form of redlining and that the LGBT community is the new target.