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WaMu Gave Grandma's Money to Crooks

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New York Times Reporting on ICT

The article appeared on May 21, 2007.

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Monday, May 21, 2007
New York Times Article on Telemarketer Scammers
Never heard back from Charles Duhigg but saw that his article appeared today:

Bilking the Elderly, With a Corporate Assist

I'd say that I was happy to see it, but it is anything but happy reading. A great article and I was interested to see that it is the number 2 most popular article on the Times' site today.

The case of Richard Guthrie is just the kind of case I imagined when my grandmother was scammed. I'm very sorry to hear what happened to him and what I can imagine are thousands and thousands like him. I can only express relief that my grandmother didn't end up this far in.

I noticed that the article also reinforces a central thesis of this blog -- American banks and their damned unsigned checks are a big part of the problem:

State regulators have tried to protect victims like Mr. Guthrie. In 2005, attorneys general of 35 states urged the Federal Reserve to end the unsigned check system.

“Such drafts should be eliminated in favor of electronic funds transfers that can serve the same payment function” but are less susceptible to manipulation, they wrote.

But the Federal Reserve disagreed. It changed its rules to place greater responsibility on banks that first accept unsigned checks, but has permitted their continued use.

More details in the article:

In the case of Mr. Guthrie, criminals turned to Wachovia.

Between 2003 and 2005, scam artists submitted at least seven unsigned checks to Wachovia that withdrew funds from Mr. Guthrie’s account, according to banking records. Wachovia accepted those checks and forwarded them to Mr. Guthrie’s bank in Iowa, which in turn sent back $1,603 for distribution to the checks’ creators that submitted them.

Within days, however, Mr. Guthrie’s bank, a branch of Wells Fargo, became concerned and told Wachovia that the checks had not been authorized. At Wells Fargo’s request, Wachovia returned the funds. But it failed to investigate whether Wachovia’s accounts were being used by criminals, according to prosecutors who studied the transactions.

In all, Wachovia accepted $142 million of unsigned checks from companies that made unauthorized withdrawals from thousands of accounts, federal prosecutors say. Wachovia collected millions of dollars in fees from those companies, even as it failed to act on warnings, according to records.

First time I've heard this mentioned. Rekindles my rage with Washington Mutual, Faye Chapman, Andrew Samuels, and all the banking industry's lackeys. Put the Federal Reserve now at the top of that list.

Still can't figure out why in the hell this antiquated and grossly insecure method of payment is allowed to continue. Other than an ingrained reverence for the status quo.