Wednesday, February 6, 2008

Banks Behaving Badly: Wachovia

Wachovia has always had the reputation locally of treating customers badly; most people in the area have labeled the bank “Walk-all-over-you”. However it appears that Wachovia has even sunk beyond the low expectations of the community in its latest fiasco – which involved actively participating in the defrauding of its own customers in order to generate fees. This may be the event which sinks the reputation of consumer banking to a new low.

Wachovia allowed fraudulent telemarketers to use the bank’s accounts to steal millions of dollars from unsuspecting victims – in many cases the victims were their own customers. Furthermore the complaints state that the bank even possibly went further in providing account information to questionable telemarketers which allowed these scam artists direct access to customers’ accounts for fraudulent purposes.

Even worse, many of the victims were elderly. Wachovia accepted fraudulent, unsigned checks that withdrew funds from the accounts of victims. “Wachovia forwarded those checks to other banks that were unaware of the frauds, which in turn sent money to the swindlers.”

Why did Wachovia support these scams - because they were making a ton of money in fees. The bank charged fraud artists a large fee every time a victim spotted a bogus transaction and demanded their money back. “One company alone paid Wachovia about $1.5 million over 11 months, according to investigators.” In fact records demonstrate that the bank actively recruited telemarketing companies it knew had been accused of fraud. Wachovia was not only aware of these crimes but actively supported them as a string of internal emails demonstrate.

Sadly, Wachovia and most other banks accused of involvement in similar frauds have never been publicly fined or prosecuted by federal regulators for aiding telemarketing criminals. Well hopefully the civil lawsuits will at least recover some of the money for victims, and make banks aware that these types of abusive practices are unacceptable. Maybe is it time for the State Attorney Generals to step up and prosecute the offending banks, seeing how the federal government has been ineffective in stopping this fraud.

Papers Show Wachovia Knew of Thefts