Fifth Third Bank has agreed to pay $20 million in penalties to settle investigations by the Consumer Financial Protection Bureau (CFPB) into its fraudulent practices. The settlement addresses two major issues: the creation of fake customer accounts and the illegal charging of unnecessary auto insurance policies.
The CFPB’s investigation revealed that Fifth Third Bank forced customers to pay for unneeded auto insurance policies, affecting over 35,000 customers and resulting in more than 1,000 vehicle repossessions. The bank demanded borrowers pay for unnecessary coverage or face delinquency, additional fees, and repossessions. As part of the settlement, Fifth Third must pay $5 million in redress to affected customers and reform its business practices.
In a separate but related matter, the CFPB filed a proposed court order requiring the bank to pay an additional $15 million penalty for incentivizing employees to create fake customer accounts. The order also bans Fifth Third from setting employee sales goals that encourage fraudulent account openings.
Fifth Third Bank, based in Cincinnati, Ohio, operates branches in 12 states across the Midwest and Southeast. The bank’s chief legal officer, Susan Zaunbrecher, stated that they have already taken significant action to address these “legacy matters,” including identifying issues and taking initiative to rectify them.
This settlement is not Fifth Third’s first encounter with CFPB penalties. In 2015, the bank was ordered to pay $18 million for discriminatory auto loan pricing affecting Black and Hispanic borrowers. It was also fined $3.5 million for illegal credit card practices.
The CFPB’s director, Rohit Chopra, emphasized that the agency is ordering Fifth Third to clean up its broken business practices or face further consequences. The penalties will be paid into the CFPB’s victim relief fund.
This case highlights ongoing concerns about unethical practices in the banking industry and underscores the importance of robust consumer protection measures. As financial institutions continue to face scrutiny, the CFPB’s actions against Fifth Third Bank serve as a reminder of the potential consequences for engaging in fraudulent or harmful practices against consumers.
Source: CNN
