Parker Waichman LLP is investigating a potential class action lawsuit on behalf of consumers – primarily the elderly – who have been victimized by fraudulent telemarketers – as well as the banks playing a key role in these dubious transactions.
On a national scale, banks – from giant national operations like Wells Fargo and Wachovia to smaller regional players, including Zions First National Bank of Utah, National Penn Bank and Harleysville National Bank – have been helping to facilitate the theft of billions of dollars of fraud each year, according to interviews The New York Times conducted with consumer lawyers and state and federal prosecutors in early June.
In these schemes, the banks do not generally interact directly with the marketers that are defrauding the public. Rather, the banks establish relationships with intermediaries that handle the marketer’s payments – as well as dole out the banks’ fees.
The marketers, typically telemarketers or Internet companies, concoct various kinds of schemes to get banking information from people they have targeted. In one case, noted by Courthouse News, a plaintiff involved in a class-action lawsuit said in the complaint that a telemarketer basically tricked him into revealing his bank account information, then yanked nearly $400 out of the man’s account.
For another example, a telemarketing agent identified himself as a Medicare official, and suggested that the elderly man he had called update his health insurance card. The man provided his bank information, as asked. But instead of a new insurance card he received notice that he had been enrolled in National Health Net Online’s discount health plan. The company had withdrawn $299.95 from his bank account as payment, according to records reviewed by The New York Times.
Between 2007 and 2009, tens of thousands of Americans, many of them over age 65, lodged complaints with state attorneys general, banking regulators and the F.T.C., requesting refunds for bank charges that they say were unauthorized.
The intermediaries – basically payment processors – assist the fraudulent telemarketers by opening bank accounts into which they transfer the money from the unsuspecting victims, after first deducting a fee for their services.
A key way the banks provide their services involves transferring their telemarketer client’s funds to offshore accounts typically located offshore, in the Caribbean, Canada and India.
The banks are generally aware that something is wrong. According to internal e-mails and other documents, Zions bankers, for example, recognized something was amiss because an enormous number of customers were disputing payments to some processors. But the banks tend to continue handling the transactions. One payment processor executive suggested that the reason is obvious: they are making too much money to turn away from this type of business.
Litigation Against These Fraudulent Marketers and Banks is Thriving
The Times reviewed hundreds of filings in connection with civil lawsuits brought by federal authorities and a lawsuits filed on behalf of consumer law firm against Zions and another regional bank, First Bank of Delaware.
Five national banks are part of a class action lawsuit in Philadelphia Federal Court for helping “unscrupulous telemarketers” launder millions of dollars swiped from consumers, according to Courthouse News.
Zions First National Bank of Utah, Wells Fargo, Wachovia, National Penn Bank and Harleysville National Bank are the banks named in the complaint; also being sued are three processing companies: NetDeposit, MP Technologies (dba Modern Payments), and Teledraft. Twenty allegedly fraudulent telemarketers are mentioned in the lawsuit but not named as defendants.
Lawsuits have also been filed in the Eastern District of Pennsylvania and in Ohio.
According to The New York Times, the U.S. Justice Department is getting involved, taking aim at the banks’ role in giving fraudulent merchants access to the United States financial system. The department is considering civil and criminal actions against a number of banks for profiting from fraud, as well as for not safeguarding against these unscrupulous merchants.
These Scams Primarily Target the Elderly
AARP, the National Association of Attorneys General and the Federal Trade Commission estimate that 85 percent of the victims of fraudulent telemarketing are age 65 or older.
“For several reasons — financial worries, age, loneliness — older people are particularly vulnerable to what is known as mass market fraud, deceptive pitches that arrive by telephone, mail and the Internet,” The New York Times noted.
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