Wachovia to pay up to $144M in telemarketing settlement

Wachovia Corp. has agreed to pay as much as $144 million in a settlement with federal regulators over allegations that elderly customers were harmed by its relationship with several telemarketers.

According to the Office of the Comptroller of the Currency, the case involved the use of "remotely created checks," which do not require a customer's signature. Instead, the signature block of the check included text such as "authorized by your depositor, no signature required."

According to regulators, telemarketers with accounts at Wachovia called the bank's customers and offered them items such as medical-discount plans or vouchers for discount travel and groceries. They then used a remotely created check to withdraw funds from customers' accounts.

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The Office of the Comptroller says a large percentage of customers said the checks were never authorized or that they never received the products or services offered by the telemarketers.

The settlement follows an 18-month investigation.

"This situation was unacceptable and we regret it happened. We will work diligently to provide restitution to consumers affected by the situation and to educate consumers," Wachovia says in a written statement. "Wachovia is pleased to have resolved this matter with the OCC."

Wachovia says it doesn't believe the settlement will have an adverse effect on its financial condition.

Wachovia has not admitted any wrongdoing. The Charlotte-based bank (NYSE:WB) will pay up to $125 million in claims, $8.9 million toward consumer-education programs for the elderly and a $10 million fine.