Telemarketing claims cost Wachovia

Wachovia Corp. has agreed to pay an estimated $144 million to settle federal allegations that it failed to stop telemarketers who were charged with taking advantage of thousands of elderly consumers.

The federal Office of the Comptroller of the Currency said Friday that Charlotte, N.C.-based Wachovia didn’t act quickly enough to block telemarketers and payment processors who maintained their accounts at the bank.

The marketers obtained customers’ bank account numbers while selling products including vouchers for discount travel as well as groceries and medical discount plans.

Wachovia did not admit wrongdoing but will pay as much as $125 million in claims, $8.9 million toward consumer education programs and a $10-million fine.

“This situation was unacceptable and we regret it happened,” said Wachovia spokeswoman Christy Phillips-Brown. “We will work diligently to provide restitution to consumers affected by the situation and to educate consumers.”

Phillips-Brown said the bank was not directly involved in the telemarketing activity or soliciting of account information from consumers and said the settlement was not expected to affect the company’s financial condition.

The Wachovia case, the subject of an 18-month probe by bank regulators, involved the telemarketers’ use of “remotely created checks,” which do not require a customer’s signature.

Regulators said telemarketers would make sales calls, obtain customers’ account information, create a check and withdraw cash from customers’ accounts.

The government said a “large percentage” of the consumers complained, saying they never authorized the payments or didn’t receive the products or services offered. Those affected included customers with accounts at numerous banks, including Wachovia.

After the bank became aware of the situation, it “failed to take quick action to terminate these account relationships or otherwise correct the problem,” the Office of the Comptroller of the Currency said in a statement.

Federal and state officials have been pursuing cases against the telemarketing firms involved in the case.

Wachovia shares rose $1.43, or 5.2%, to close at $28.81 on Friday.