Fifth Third Bank Faces $20 Million in Penalties for Illegal Practices

The Consumer Financial Protection Bureau (CFPB) has taken action against Fifth Third Bank for a series of illegal activities, resulting in $20 million in penalties and mandatory redress for approximately 35,000 affected consumers. The enforcement actions, announced on July 9, 2024, address two primary issues: forced auto insurance and the creation of unauthorized bank accounts.

Fifth Third Bank has been ordered to pay a $5 million penalty for forcing unnecessary vehicle insurance onto borrowers who already had coverage. This practice, occurring between July 2011 and December 2020, affected over 37,000 instances where customers were charged for duplicative or unnecessary coverage. The bank's actions led to:

1. Over $12.7 million in illegal fees charged to customers
2. Approximately 1,000 vehicle repossessions due to delinquencies caused by these illegal charges

CFPB Director Rohit Chopra stated, "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."

In a separate action, the CFPB filed a proposed court order that would require Fifth Third Bank to pay an additional $15 million penalty for opening fake accounts in customers' names. This resolves a lawsuit initially filed in March 2020, which alleged that the bank created unauthorized accounts as part of a "cross-sell" strategy to increase products and services provided to existing customers.

The proposed order would ban Fifth Third Bank from setting employee sales goals that incentivize fraudulent account openings.

Remediation and Penalties

Under the enforcement actions, Fifth Third Bank is required to:

1. Provide redress to approximately 35,000 harmed consumers
2. Pay a total of $20 million in penalties
3. Cease setting sales goals that lead to unauthorized account openings

This is not the first time Fifth Third Bank has faced regulatory action. In 2015, the CFPB took two separate actions against the bank for discriminatory auto loan pricing and illegal credit card practices. Fifth Third Bancorp, headquartered in Cincinnati, Ohio, is a large bank holding company with $214 billion in assets. It operates approximately 1,300 branches across 12 states, primarily in the Midwest and Southeast.

The CFPB's actions underscore the agency's commitment to protecting consumers from unfair and deceptive practices in the financial sector. Director Chopra emphasized that Fifth Third Bank's senior executives and board of directors must "clean up these broken business practices or else face further consequences."

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