Gay entrepreneur wins battle with Citibank

March 4, 2010

When entrepreneur Jason Goldberg found out Citibank had deactivated his business account, he did what most people would do: He called, he inquired, he listened. Then he took his fight online.

The tussle resulted in a revised policy at Citi, but also raised a more serious question of free speech – the basis of the First Amendment.

Goldberg’s account was deactivated last week after a review of his gay social networking site – fabulis.com – classified it as “porn.”

The New York-based entrepreneur, who vehemently rejects the “porn” label, said he received no warning prior to his account being blocked and when he first called the bank to inquire, he was told it was due to “objectionable content” on his blog. Goldberg was told the site was reviewed by a Citi administrator who found the “content was not in compliance with Citibank’s standard policies.” Goldberg said he heard the same response from three different Citi representatives.

So what’s a social-media entrepreneur to do? Goldberg began blogging about the issue and including snippets of conversations with Citi officials. The serial entrepreneur, who recently raised $625,000 in seed funding from a round led by The Washington Post Co., said fabulis is a “serious business” and found it hard to believe any content on his blog was so offensive as to merit his bank account being deactivated.

Twenty four hours after Goldberg went public, Citi reversed course and Bill Brown, who oversees the bank’s Manhattan branches, issued an email apology to Goldberg, in which he said “statements that were made by any Citi representative related to the content of your website were inappropriate and made in error.”

Citi spokesman Robert Julavits told Reuters that “the issue with Mr. Goldberg’s account was missing documentation; it had nothing to do with the content of his (Goldberg’s) site.”

For Goldberg, the incident raised First Amendment freedom of speech concerns.

“It appears like it’s not just an isolated incident; that there are certain triggers that when they’re reviewing websites for content that they decide whether these are businesses they want to do business with,” said Goldberg, who added he doesn’t think Citi is homophobic, but having them snooping around his blog is troubling. “When did Citibank start reviewing blogs to decide who can bank with them? Who’s Citibank to decide what is appropriate content? I think it’s really a slippery slope.”

Recently, the publicly bailed-out Citi, announced a revised policy for Web-based businesses: “We recognized that we needed clearer and less subjective guidelines with regard to opening Internet business accounts,” Citi said in a statement. “We will continue to reserve the right to decline or suspend an account if we find illegal or discriminatory content, or if the site involves gambling or pornography. Beyond that specific due diligence, however, we do not monitor or evaluate our customers’ web content.”

Lynn Wooten, a diversity expert and associate professor of management at Michigan’s Ross School of Business, said it appeared that Citi was doing all the right things, but added: “It just becomes in the next couple weeks are there any other actions that will follow?”

Wooten, who has reviewed all manner of discrimination cases over the last 15 years, conceded Goldberg’s case was the first she had encountered that “intersects with the First Amendment, the Internet and a sexual orientation.”

Wooten said whatever content appears in Goldberg’s blog “shouldn’t have anything to do with his banking relationship with Citibank” and if it did, that begs the question: “What’s the role of corporations and do they have the power to say yes and no?”

For his part, Goldberg, who himself owns shares in Citi, is ready to move on, but is still scheduled to meet with Brown, before deciding on whether or not he keeps his account with the bank.

“We’re a small fish in a big pond, but I’m not going to do business with folks who aren’t acting in our interest and aren’t acting in the public interest,” Goldberg said. “Citibank has a lot of support from gay organizations and they’ve done a lot outwardly and publicly in support of gay issues, but as a bank taking TARP they’ve got to be really sensitive to the fact that if they do some things that are against the public interest, there’s going to be a big backlash.”

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