Markey: Weak Wachovia Deal Shortchanges Elderly Fraud Victims

Press Release

Representative Edward J. Markey (D-MA), a senior member of the House Energy and Commerce Committee, today reacted to a settlement agreement reached between Wachovia Bank and the Office of the Comptroller of the Currency (OCC) that resulted from an OCC investigation into the bank's relationship with several telemarketing and payment processing firms engaged in fraudulent activities. For several years, Wachovia accepted thousands of fake "remotely created checks" from telemarketing scammers and collected millions in fees despite warnings that the transactions were fraudulent.

"Financial fraud of this type is an insidious scourge that preys upon a vulnerable population of Americans. We must ensure not only that the victims of this fraud are reimbursed, but also that safeguards are strengthened to thwart schemers seeking to rip off consumers in the future," said Rep. Markey.

"Today's settlement makes clear that Wachovia engaged in unsafe and unsound banking practices in its dealings with some its telemarketing and payment processing business customers, who used the bank as part of a scheme to drain millions of dollars from the accounts of thousands of vulnerable Americans, including the elderly and those afflicted with debilitating diseases such as Alzheimer's."

According to the settlement announced today by the OCC, fraud victims have to file a claim to receive reimbursement.

"While I am pleased that the OCC and Wachovia have reached a settlement, I am concerned that the structure of this settlement may result in only a fraction of the victims receiving the restitution they are entitled to. Specifically, the settlement's requirement for victims to file claims in order to be reimbursed may prove to be too high a barrier to surmount for many in the elderly population that was the target of this fraud.

"I understand that in some similar cases, the OCC and other financial regulators have identified the victims of financial fraud and proactively reimbursed them, ensuring that virtually all of those who had been defrauded actually received the reimbursement they deserved. In this case, it appears that the victims could be identified, and a similar structure could be followed, which is particularly important given the potential for victims of this fraud to be unaware of the settlement or even whether they were victimized. I therefore wrote to the OCC today to ask why it has not pursued such an approach in the Wachovia matter. I look forward to the OCC's response," Rep. Markey concluded.

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