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Wachovia to pay up to $125 million settlement in check cashing lawsuit.

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Charlotte, NC: (Apr-25-08) A series of lawsuits were brought against Wachovia Corp., a Charlotte bank, by customers who claimed that they were harmed by the bank's relationship with some telemarketers and payment processors. The complaints filed with the Office of the Comptroller of the Currency, the bank's regulator, resulted in an 18-month federal investigation of the Charlotte bank, over allegations that it knowingly ignored a third-party telemarketers' use of bank accounts to steal from customers.

The suit stated that third-party telemarketers obtained bank account information from thousands of consumers, many of them elderly, by pitching products like grant writing kits and medical discount plans. The telemarketers then used that information to write checks to themselves, allegedly from the consumers they had called. Since the checks did not require a signature from the account holder, they could make withdrawals.

Further, the suit alleged that from 2003 to 2006, the telemarketers deposited these checks into Wachovia accounts, causing funds to be withdrawn from the accounts of the victims, who were customers at various banks. According to officials at the Office of the Comptroller of the Currency, Wachovia was aware of these high return rates, but failed to take quick action to terminate these account relationships and correct the problems.

As part of a settlement reached, federal officials stated that Wachovia Corp. will pay up to $125 million to customers harmed by the bank's complacency in handling the fraud. [THE CHARLOTTE OBSERVER: WACHOVIA AGREES TO SETTLEMENT ON CHECKS]

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