Fifth Third Bank received a $20 million fine for opening unauthorized accounts in customers’ names and adding auto insurance to borrowers who already had coverage, according to the Consumer Financial Protection Bureau on Tuesday.
The bank is required to pay the penalty and provide redress payments to 35,000 affected consumers, including 1,000 individuals who had their vehicles repossessed, as reported by the CFPB.
CFPB Director Rohit Chopra stated, “The CFPB has discovered Fifth Third Bank unlawfully adding excessive charges to auto loan bills, leading to almost 1,000 families losing their cars to repossession. We are instructing the senior executives and board of directors at Fifth Third to rectify these unethical practices or face further consequences.”
Of the $20 million fine, $15 million is related to the fake account incidents that were part of a CFPB lawsuit from March 2020. The new penalty also prohibits the bank from encouraging fraudulent account openings to meet employee sales targets and resolves the lawsuit, the CFPB mentioned.
The remaining $5 million addresses the CFPB’s findings that Fifth Third forced unnecessary insurance policies on loan borrowers. The agency noted that over half of the policies charged to borrowers between July 2011 and December 2020 were deemed unnecessary, resulting in over $12.7 million in illegal fees, and in some cases, car repossessions.
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In a statement, Fifth Third Bank mentioned that the settlement mandates them to maintain current policies and develop plans under CFPB supervision to ensure proper compensation for affected customers.
“We have taken significant steps to address these past issues, including identifying and rectifying the problems. Our customers are always our top priority, and we are happy to resolve these issues so we can focus on creating value for our stakeholders, customers, employees, and communities,” the statement concluded.
The Cincinnati-based bank operates 1,300 branches across 12 states in the Midwest and Southeast and has assets totaling around $214 billion.
In 2015, Fifth Third Bank was fined by the CFPB twice for fraudulent actions, including discriminatory auto-loan pricing and illegal credit card practices, resulting in penalties and compensation for affected parties.
