Fifth Third Bank was hit with a $20 million fine for opening unauthorized accounts in the names of its customers and forcing auto insurance onto borrowers who already had coverage, the Consumer Financial Protection Bureau said Tuesday.
The bank must pay the penalty in addition to redress payments to 35,000 harmed consumers, 1,000 of whom had their cars repossessed, the CFPB said.
“The CFPB has caught Fifth Third Bank illegally loading up auto loan bills with excessive charges, with almost 1,000 families losing their cars to repossession,” said CFPB Director Rohit Chopra. “We are ordering the senior executives and board of directors at Fifth Third to clean up these broken business practices or else face further consequences.”
Of the $20 million total fine, $15 million is for the fake account offenses, which were the subject of a March 2020 CFPB lawsuit against the bank. The new penalty, which also forbids the bank from incentivizing fraudulent account openings as part of “cross-selling” employee sales quotas, resolves the lawsuit, the CFPB said.
The other $5 million addresses the CFPB’s finding that Fifth Third forced loan borrowers into “unnecessary and duplicative” insurance policies. The agency said more than 50% of policies charged to borrowers between July 2011 and December 2020 fall under this category, triggering more than $12.7 million in “illegal, worthless fees,” and sometimes resulting in customers’ vehicles being repossessed due to delinquent payments.
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In a statement, Fifth Third Bank said the settlement requires it to “maintain existing policies” and develop plans under the CFPB’s supervision to ensure remediation for harmed customers.
“We have already taken significant action to address these legacy matters, including identifying issues and taking the initiative to set things right,” the statement read. “We consistently put our customers at the center of everything we do. We are pleased to put these historical matters behind us so we can continue to focus on creating sustainable long-term value for our shareholders, customers, employees and in our communities.”
The Cincinnati-based bank operates 1,300 branches in 12 states, centered in the Midwest and Southeast, and has around $214 billion in assets.
In 2015, Fifth Third Bank was also fined twice by the CFPB for fraudulent practices: one for discriminatory auto-loan pricing for Black and Hispanic borrowers, for which it was penalized $18 million, and the other for illegal credit card practices. The CFPB fined it $500,000 for the credit card action and ordered it to pay $3 million to harmed customers.
