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Aggressive Telemarketing Under Tighter Review: Wachovia OCC Order Called Sign of New Era'


WASHINGTON - The Office of the Comptroller of the Currency's $144 million enforcement order against Wachovia Corp. is likely to force banks to step up oversight of telemarketing customers.

Mutual fund companies and their adviser sales partners would also be wise to rethink their seminars, webinars, direct mail, IMs and other one-on-one efforts, as well.

The order, the second-largest in the agency's history, was issued a day after the OCC put out guidance warning national banks of the dangers posed by such companies, and it signaled growing concerns among regulators about their relationships with banks.

"It's indicative of a new era in regulation, and consumer protection is hotter now than ever before, and what it means is bankers are responsible for safeguarding a lot more than the personal information of their customers," said Jean Veta, a partner at Covington & Burling LLP. "Essentially, the regulators are moving from the banks' consumer customers to look at the customer's customers. They are translating some anti-money-laundering concepts into the consumer fraud area more generally."

Though Wachovia said it had dropped ties with telemarketing firms, lawyers stopped short of predicting the order and guidance would lead other banking companies to follow suit-as they have in the case of money-services businesses-saying it represented a bigger potential income stream.

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