Bank Of America Scamming Hispanics, Local Lawsuit Says
Gonzalez, who was born in Mexico and speaks little English, claims that he, along with thousands of other Hispanics, was the victim of a predatory scheme by B of A and the others to steal his money right out of his bank account. The case was filed in Houston federal court.
"We thought about this case very deeply," says Gonzalez's lawyer, Kenneth Wynne, "and frankly we care about it every bit as deeply. We think something isn't right here and really needs to be made right."
According to the lawsuit, here's how the alleged scam works:
After someone "meeting Jorge Gonzalez's description" opens a B of A account, the bank forwards his profile information, amount deposited and account number to a marketing company, which then has a telemarketing company with Spanish speakers call the new account holder at the phone number he gave to the bank. The goal is to get the new account holder to buy insurance.
The payment for the insurance is by automatic withdrawal and as soon as the telemarketer thinks he has the fish on the hook and are about get the person to say "Okay," he begins tape-recording the phone call. As soon as the account holder does agree to buy the insurance, the telemarketer hangs up and the automatic withdrawals for premium payments begin.
Most of the money taken from the account, however, is not used to pay for insurance. A large chunk gets divided amongst B of A, the marketing company and the telemarketing firm. Only a small percentage goes to AIG for insurance premiums. The coverage is "almost a joke." It does not apply in many circumstances and the policy holders are not even direct beneficiaries. So-called "Master Policies" are issued to Bank of America as the primary insured. In addition, the coverage can be cancelled if the policy holder ever closes his B of A account.
In 2008, according to the lawsuit, Bank of America took in nearly $45 million from the account deposits of its "poorest customers." Likewise, the marketing company, which B of A supposedly financed to the tune of $40 million, took in more than $12 million from the scheme, the lawsuit states.
"In this day in which large banks such as Bank of America have squandered assets on bad loans and speculative investments, have become dependent on hand-outs from the federal government and are scrambling to restore minimally acceptable levels of capital strength," Wynne states in the lawsuit. "Bank of America is resorting to tapping the accounts of low level, undereducated, often Hispanic depositors under false and predatory pretenses."
Hair Balls will let you know if we hear back from Bank of America or AIG's lawyers.