Fifth Third Bank has been fined $20 million for opening unauthorized accounts in customers’ names and forcing borrowers who already had auto insurance to sign up for the programs, the Consumer Financial Protection Bureau announced Tuesday.
The bank must pay penalties in addition to compensation to 35,000 affected consumers, 1,000 of whom have had their cars impounded. CFPB Said.
“The CFPB found that Fifth Third illegally added excessive fees to auto loan invoices, causing nearly 1,000 families to lose their cars to foreclosure,” said CFPB Director Rohit Chopra. “We have ordered Fifth Third’s senior management and board of directors to correct these flawed business practices or face further penalties.”
Of the total $20 million fine, $15 million is for fake account violations that were the subject of a lawsuit the CFPB filed against the bank in March 2020. The new fine also includes a prohibition on the bank encouraging the opening of fraudulent accounts as part of employee “cross-selling” sales quotas, resolving the lawsuit, the CFPB said.
The remaining $5 million is in response to the CFPB’s findings that Fifth Third forced “unnecessary and duplicative” insurance policies on its loan borrowers. More than 50% of the insurance billed to borrowers between July 2011 and December 2020 fell into this category, resulting in more than $12.7 million in “illegal and worthless fees” and, in some cases, resulting in the repossession of customers’ vehicles due to non-payment, according to the CFPB.
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in statementFifth Third said the settlement requires it to “maintain existing policies” and develop a plan under CFPB oversight to ensure relief for harmed customers.
“We have already taken significant steps to address these historic issues, including identifying the issues and taking the initiative to put things right,” the statement said. “We have always put our customers first in everything we do. We are pleased to be able to put these historic issues behind us and remain focused on creating sustainable long-term value for our shareholders, customers, employees and communities.”
The Cincinnati-based bank operates 1,300 branches in 12 states, mostly in the Midwest and Southeast, and has assets of about $214 billion.
In 2015, Fifth Third Bank was fined twice by the CFPB for misconduct: once for $18 million for discriminatory pricing of auto loans against black and Hispanic borrowers, and once for credit card misconduct. The CFPB fined the bank $500,000 on the credit card issue and ordered the bank to pay $3 million to affected customers.
