The Art Of Doing Business: Finances, Taxes, The Economy and Profits

WASHINGTON — The Office of the Comptroller of the Currency (OCC) has entered into a settlement agreement with T Bank, N. A., Dallas, TX (Bank), that directs the Bank to make $5.1 million in restitution to over 60,000 consumers adversely affected by its relationships with a third party payment processor and several telemarketers and internet merchants. The Bank has agreed to make restitution by issuing checks directly to the affected consumers. The Bank is also required to pay a $100,000 civil money penalty to the U.S. Treasury.

In reaching the settlement, the OCC concluded that the Bank engaged in unsafe or unsound practices during the course of its relationships with the payment processor and the telemarketers and internet merchants, and unfair practices within the meaning of the Federal Trade Commission Act. The account relationships with the payment processor and merchants ended in August 2007.

The practices cited by the OCC in the settlement involved the use of remotely created checks, or RCCs, by telemarketers, internet merchants, and the payment processor that maintained account relationships with the Bank. An RCC is a check that is not created by the accountholder and does not bear the accountholder’s signature. Instead, the signature block of the check includes text such as “authorized by your depositor, no signature required.”

A large percentage of these RCCs were returned to the Bank by individuals, or their financial institutions, who said the checks were never authorized or that they had never received the products or services promised by the telemarketers or merchants. In some cases, the return rates exceeded 60% of the total deposited.

In addition to the monetary components of the settlement, T Bank agreed to develop new policies and procedures with respect to RCCs, before accepting any new customers that regularly deposit RCCs.