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Social networking startup Fabulis last week suddenly found its bank account locked and scheduled for termination, based on what several Citibank (s c) employees told founder and CEO Jason Goldberg was an issue of “objectionable content” on the company’s blog. Although no one from the bank ever mentioned it specifically, Goldberg suspected the sanctions were related to the fact that Fabulis is a social network and lifestyle site aimed at gay men. In a blog post, he says Citibank confirmed to him that the site was blocked because a Citibank staffer said it contained porn (which even a cursory check of the site shows that it clearly doesn’t). The bank now says it has “updated and clarified its procedures” to prevent such issues from occurring in the future. Goldberg says:
It was clearly a mistake on the bank’s part — one which highlights the prevailing subtle forms of homophobia and/or lack of understanding we see periodically from some big corporations. Someone there made a misguided decision in reviewing our content and the systems and policies of the bank allowed it to go through.
According to a statement released by Citibank, the institution conducts regular “due diligence” on its business accounts, and says it reserves the right to “decline or suspend an account if we find illegal or discriminatory content, or if the site involves gambling or pornography.” However, it adds that as a result of certain (unnamed) incidents, “we have made it clearer to our bankers what the due diligence process entails [and] beyond that specific due diligence…we do not monitor or evaluate our customers’ web content.”
As far as I’m concerned, the part of the Fabulis incident that makes Citibank look the worst isn’t the blocking or threatened termination of the startup’s account, although that is pretty bad — it’s the repeated attempts to sweep the issue under the carpet and/or change the bank’s story as it was happening. At first, the bank tried to pretend that the affair was simply a “misunderstanding,” and blamed it on some missing documentation. Only after Goldberg refused the initial apology and continued to blog and post to Twitter about it did the bank finally admit that it had made a mistake and apologize.
Here’s a quick tip, guys: When something like this breaks loose in the blogosphere or on Twitter, your best option is to get out in front of it, not to pretend it didn’t happen.