Make us your home page

Wachovia to pay up to $144M over telemarketers

Wachovia Corp. will pay $144-million to settle charges that it allowed telemarketers to use its accounts to help them take millions of dollars from elderly people across the country.

The federal Office of the Comptroller of the Currency said Friday that Wachovia failed to act against the telemarketers even after the victims and their banks complained they were being defrauded.

The government said the telemarketers, including a large operation based in Largo, got bank account information from victims while selling vouchers for discount travel and groceries, identity theft certificates and other questionable products and services. The information was then used to draft money out of the victims' accounts and deposit it in the Wachovia accounts of the telemarketers and payment processors.

Wachovia benefited from the $3.9-million in fees it earned on the accounts, which were active from June 2003 through December 2006. Most of the victims were not Wachovia customers.

The settlement document cites a Largo telemarketing company, FTN Promotions Inc., which did business under multiple names, including Suntasia Inc., Strategia Marketing LLC and Guardian Marketing Services Corp.

The Federal Trade Commission sued FTN and eight related companies last year in federal court in Tampa, saying they scammed tens of thousands of customers out of millions of dollars. The case is pending.

One of the victims, Gayla Scott of Fort Myers, said last year that she lost nearly $300 after getting a call saying she qualified for a free vacation in Orlando. Three companies took money out of her bank account and it took the assistance of the Better Business Bureau to get it back.

Wachovia is the largest bank in Florida, with 19 percent of the market. It passed Bank of America with the acquisition of World Savings Bank. The bank has not admitted any wrongdoing but will pay up to $125-million in restitution, $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." She said Wachovia no longer accepts accounts from companies that are strictly telemarketers.

Wachovia's restitution will be distributed in three ways. Payments to those who lost money to FTN Promotions and its related companies will go through the court-appointed receiver in the Tampa case. A receiver in a separate Pennsylvania case will handle restitution to those whose money went through Payment Processing LLC.

Helen Huntley can be reached at

Wachovia Q&A

Q. How did the scam work?

A. Telemarketers tricked people into giving their bank account information by offering discounted travel and services, gifts and free trial memberships. The telemarketers then prepared unsigned checks against the victims' accounts and deposited them into Wachovia accounts belonging to the telemarketers or payment processors. The signature block on the checks said "authorized by your depositor, no signature required." Most victims were not Wachovia customers.

Q. What did Wachovia do wrong?

A. It failed to take timely action against the telemarketers and payment processors who were its customers. The government says many victims and their banks complained to Wachovia that the drafts were unauthorized.

Q. What happens next?

A. Wachovia will set aside the $125-million restitution money and develop a payment plan, which will be publicized on its Web site. If money is left over after all those eligible are paid, Wachovia gets it back. The bank has 45 days to come up with a plan for spending $8.9-million on consumer education, then 24 months to spend it.

Wachovia to pay up to $144M over telemarketers 04/25/08 [Last modified: Wednesday, April 30, 2008 4:14pm]
Photo reprints | Article reprints

Copyright: For copyright information, please check with the distributor of this item, Personal Finance Editor.

Join the discussion: Click to view comments, add yours

  1. PunditFact: George Will's comparison of tax preparers, firefighters based on outdated data


    The statement

    "America has more people employed as tax preparers (1.2 million) than as police and firefighters."

    George Will, July 12 in a column

    The ruling

    WASHINGTON - JANUARY 08: Conservative newspaper columnist George Will poses on the red carpet upon arrival at a salute to FOX News Channel's Brit Hume on January 8, 2009 in Washington, DC. Hume was honored for his 35 years in journalism. (Photo by Brendan Hoffman/Getty Images)
  2. Appointments at Shutts & Bowen and Tech Data highlight this week's Tampa Bay business Movers & Shakers



    Retired U.S. Navy Commander Scott G. Johnson has joined Shutts & Bowen LLP in its Tampa office as a senior attorney in the firm's Government Contracts and Corporate Law Practice Groups. Johnson brings 15 years of legal experience and 24 years of naval service to his position. At Shutts, Scott will …

    United States Navy Commander (Retired) Scott G. Johnson joins Shutts & Bowen LLP in its Tampa office. [Company handout]
  3. Macy's chairman replaces ex-HSN head Grossman on National Retail Federation board


    Terry Lundgren, chairman of Macy's Inc., will replace Weight Watchers CEO Mindy Grossman as chair of the National Retail Federation, the organization announced Wednesday. Grossman stepped down from her position following her move from leading St. Petersburg-based HSN to Weight Watchers.

    Weight Watchers CEO and former HSN chief Mindy Grossman is being replaced as chair of the National Retail Federation. [HSN Inc.]
  4. Unexpected weak quarter at MarineMax slashes boating retailer shares nearly 25 percent


    CLEARWATER — Just when you thought it was safe to go back into the water, a boating business leader issued a small craft warning.

    Bill McGill Jr., CEO of Clearwater's MarineMax, the country's biggest recreational boat retailer. [Courtesy of MarineMax]
  5. CapTrust moving headquarters to downtown Park Tower


    TAMPA — CAPTRUST Advisors, a Raleigh, N.C.-based investment consulting firm, is moving its Tampa offices into Park Tower. CapTrust's new space will be 10,500 square feet — the entirety of the 18th floor of the downtown building, which is scheduled to undergo a multi-million-dollar renovation by 2018.

    CAPTRUST Advisors' Tampa location is moving into Park Tower. Pictured is the current CapTrust location at 102 W. Whiting St. | [Times file photo]