Citibanks Gay Problem

Citibank has some explaining to do after freezing the account of a gay start-up website for "objectionable content."

Fabulis, a yet-to-launch social networking and travel site aimed at gay men, had its account at Citibank shut down recently without notice. Citibank decided to "block Fabulis's bank account due to what was described to us on the phone as 'objectionable content' on our blog," Fabulis founder Jason Goldberg wrote on his site's pre-launch blog on Wednesday.

Two other bank representatives said Fabulis's content was not in line with Citibank's standards and the banking relationship would be terminated -- even though the pre-launch blog features no sex, nudity, or violence; instead, it has mostly pictures of men in hooded sweatshirts. On Thursday, Goldberg wrote on the pre-launch blog that a Citibank representative had "called to apologize and to say that all three of the Citibank individuals who over the past 24 hours each individually claimed that Fabulis's account was to be terminated for compliance issues around the content of our site, were all wrong to have said what they said."

Citibank followed that up with an official statement on Thursday: "Citibank sincerely apologizes to Mr. Goldberg for this misunderstanding. This situation had nothing to do with the content of his web site and any comments by our staff to the contrary were incorrect; we are reviewing what happened. This was a technical issue about missing documentation that is required for new business accounts. Once we resolved the situation, we unblocked the account immediately. Mr. Goldberg is a valued customer and we appreciate his business. Also, Citi is strongly committed to diversity, including support for the gay, lesbian, bisexual and transgender community, and other organizations promoting diversity. In fact, this week Citi has announced the financing for the True Colors Residence, a housing facility for homeless GLBT youth in New York City."

Then on Friday, Citibank took back the whole "missing documentation" excuse, and admitted a compliance officer reviewed Fabulis and "marked it as porn." Citibank later announced it "updated/revised its policies for internet businesses due to the fabulis affair."

Before the release of the statements, Richard Socarides -- the former gay and lesbian adviser to President Bill Clinton and a board member of Fabulis -- said he was flummoxed by Citibank's actions, but he speculated on the bank's behavior.

"We've been running these contests where we ask readers of the blog to talk about their life and what it means to be gay," Socarides said. "Because the readers are so tech-savvy, we've seen these remarkable videos from young people about what it's like to be out. Maybe it was a bit jarring [for Citibank] to see young people coming out with an openness and an honesty. I'm just surmising, though."

Socarides acknowledged that Citibank's record on gay issues is stellar -- the bank scored 100 on the Human Rights Campaign's Corporate Equality Index. "But if the frontline customer service people at the bank are not educated on these [gay-inclusive] policies, it doesn't do anyone good," he says. "It might be a case of the bank not following its own policies. It's fishy."

Aside from the homophobic implications, Citibank's actions call into question why a bank would police its clients' products or content. Citibank did not furnish Goldberg, the gay creator of Jobster.com, with a loan, just an account. Socarides said the site, which is set to launch in the coming months, began with $625,000 in seed money, mostly from the Washington Post Co.

"There are important issues relating to First Amendment rights, and technology and banking issues," Socarides says. "Since when does a bank need to pre-approve of a client's business? I'm sure they don't pass judgement on stories in the publications of their newspaper clients, or the work in an art museum."