Wachovia will pay $144 million for helping telemarketers prey upon the elderly. The Office of the Comptroller of the Currency spanked the morally bankrupt institution with one of the largest fines ever levied—but before seeing a penny of settlement money, seniors will need to fill out detailed claim forms and navigate a complex bureaucracy.
Under the scam, telemarketers called unsuspecting seniors and pretended to update their Social Security or insurance information to knock loose private financial details. The scammers then used that personal data to write themselves $142 million worth of unsigned checks, which Wachovia gladly cashed.
Upon learning that one scammer’s account received 4,500 complaints in a two-moth span, one Wachovia executive wrote in an email: “YIKES!!!! DOUBLE YIKES!!!! There is more, but nothing more that I want to put into a note.”
Though Wachovia did not admit or deny wrongdoing, the investigation found that Wachovia, one of the country’s largest banks, engaged in unsafe practices — failing to conduct suitable due diligence, failing to monitor accounts used by telemarketers and failing to follow normal procedures that would probably have uncovered the thefts.
The bank’s actions were “part of a pattern of misconduct” that resulted in Wachovia’s collecting millions of dollars in fees, regulators wrote.
Wachovia has agreed to pay a $10 million fine, contribute $8.9 million to consumer education programs and make restitution to victims that could top $125 million. In a statement, the bank said this “situation was unacceptable and we regret it happened.”
The settlement won’t affect a class action from fraud victims, or a potential criminal case from the U.S. attorney’s office.
Disturbingly, the government hasn’t tackled unsigned checks, the root cause of this pernicious scam.
In 2005, attorneys general of 35 states urged the Federal Reserve to end the unsigned check system. But the Federal Reserve demurred.
“We really need these unsigned checks to be prohibited completely,” said Mr. Miller, the Iowa attorney general. “There’s still a lot of work to be done.”
Big Fine Set for Wachovia to End Case [NYT]
PREVIOUSLY: infoUSA Marketed Lists Of “Gullible” Seniors To Known Scammers, Wachvoia Processed The Unsigned Checks
Internal Docs Prove Wachovia Knew About Telemarketer Rip-Offs All Along