CORRECTED: Wachovia accused of aiding telemarketing fraud

Corrects paragraph 1 to ... consumers from ... bank customers.

NEW YORK (Reuters) - Wachovia Corp , the fourth-largest U.S. bank, is fighting a lawsuit accusing it of letting fraudulent telemarketers use its accounts to bilk millions of dollars from consumers, court papers show.

The plaintiffs accused Wachovia of allowing some "payment processors" to create authorized, unsigned checks on behalf of telemarketers to withdraw funds from customer accounts between 2003 and 2006, court papers show.

The original complaint was filed last April. Plaintiffs are seeking class-action status on behalf of at least 346,000 victims they say lost millions of dollars, the documents show.

Bank spokeswoman Christy Phillips-Brown declined to comment on the lawsuit, but said: "We took this issue very seriously, and senior management, led by CEO Ken Thompson, was actively involved in directing aggressive steps to correct the processes related to the situation."

In court papers filed January 17, the plaintiffs accused Wachovia and its in-house lawyers of knowing "for several years" that the bank could be legally liable for dealing with fraudulent telemarketers.

In another situation, loss management official Benita Sheffield e-mailed colleagues on August 23, 2005 regarding some 4,579 complaints that an account had drawn over two months, the papers show.

Then, in a January 13, 2006 e-mail to a Wachovia lawyer, a lawyer at Royal Bank of Scotland Group Plc's Citizens Bank asked for help in halting the processing of unauthorized checks that took money from accounts of Citizens customers, court papers show. The account in question stayed open until a court froze it the next month, the papers show.

(Editing by Jan Dahinten)

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