Update: The Fabulis story had legs like I’ve never seen before. When I posted it to Hacker News it shot to number 1 in about 3 minutes and stayed there for 6 to 8 hours. A few hours later Robin Wauters from Techcrunch picked up on the story and since then it’s appeared everywhere from GigaOm and ValleyWag to FT.com. Citi has now issued a formal apology to Fabulis emphasizing their support of the LGBT community which you can read here.
Update2: Jason posted this update about 4 hours ago with some additional rather startling detail. “Yesterday I was even instructed to come into the branch to view a print-out of the “offensive” content on our site which was in “violation” of their compliance officer’s review of our business account.”
My original post follows:
In an utterly bizarre move, according to the Fabulis blog, Citibank blocked Fabulis.com’s bank account a few days ago for “objectionable content on their blog”. To give you some context, Jason Goldberg the Founder & CEO is a good friend of mine and started his career working for Bill Clinton in the White House. He then went on to T-Mobile, picked up a Stanford MBA on the way, raised $50M for Jobster which ended up buying my job search engine, then founded SocialMedian (sold to Xing) and is now working on Fabulis.
Fabulis is based in NY but Jason is still known and loved by the Seattle startup community and we may one day even forgive him for going to the east coast.
The company is still finding their niche but it looks like they’re setting up to be a travel portal for gay men. Their blog has had a ton of hilarious videos of guys describing why they’re “Fabulis”. Zero porn, nothing even mildly suggestive or risque.
Just to be completely clear, we’re not talking about refusing a line of credit here. This is a cash account belonging to a funded company that was blocked.
I haven’t had a chance to speak to Jason about this yet, so I don’t have any more detail. But after Fabulis called Citi this evening they temporarily lifted the block while “a compliance officer is asked to re-review our website on Thursday”.
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 banks 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?
One might speculate that this is a form of redlining and that the LGBT community is the new target.
After their $45 billion dollar public money bailout of Citigroup in 2008 it’s ironic that they would block the bank account of a technology startup who’s goal is to create jobs.
Whatever the reason, I hope Citi’s PR team is kicking into gear because Jason is no stranger to mainstream media (CNN video) and this seems like the sort of thing that that will get picked up.
Another great reason to move your money out of the behemoth banks and into smaller local banks. These large banks have a strange way of saying thanks to the taxpayers for bailing them out with TARP money. They’re worse than ever now.
Commented on February 25, 2010 at 12:08 am
Don’t keep your money in banks. The world’s economy is going to collapse soon.
Commented on February 25, 2010 at 1:02 am
I have used ING Direct for years, and it is by far the best bank I have ever encountered. Other banks have literally tried to rob me, but everything ING does seems fair, and as long as their business practices remain respectable as they have been, I will continue to be their customers.
Citi… I have had issues with them for years because of their abusive practices involving targeting people with high interest loans that are the worst candidates for actually paying off the loans.
Commented on February 25, 2010 at 8:07 am
Sounds like they’ve got an open and shut case against citibank. Business disruption, tortious interference with business relationships, etc, etc. Any kid out of law school could squeeze a couple million out of a bank for this kind of ham-fisted BS.
Commented on February 25, 2010 at 9:18 am
Local banks are where it’s at. I refuse to deal with a bank which exists outside of one or two geographical areas. My personal bank–and where I will likely house my startup’s funds–is one of the healthiest banks in the US, as evidenced by their reserves and their stock price, as well as analyst ratings. The fact that I can walk in, sit down at a desk, and conduct my transaction with a knowledgeable teller is worth everything.
http://www.northwestsavingsbank.com
Commented on February 25, 2010 at 11:27 am
Three Words: Silicon Valley Bank.
This would NEVER happen there.
Commented on February 25, 2010 at 12:00 pm