Fifth Third Bank Accused of Illegally Seizing Cars and Overcharging Customers

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The Consumer Financial Protection Bureau (CFPB) has imposed a $20 million fine on Fifth Third Bank for reportedly coercing auto loan consumers into purchasing unnecessary insurance policies, and subsequently repossessing vehicles when payments were missed. According to CFPB Director Rohit Chopra, Fifth Third Bank engaged in illegal practices by adding unreasonable charges to auto loan bills, resulting in nearly 1,000 families having their cars repossessed. Chopra emphasized that unless Fifth Third’s senior management and board rectify these practices, they could face additional penalties.

The bank, headquartered in Ohio, was also accused by the CFPF of setting up around 35,000 fraudulent bank accounts without customer consent as part of a sales strategy to cross-sell products. This practice, driven by management’s emphasis on meeting sales targets, led to performance-linked incentives for employees at both managerial and branch levels. This resulted in a separate lawsuit by the CFPB in March 2020, which has now been settled as part of the recent penalties.

Under the terms of the enforcement action, Fifth Third is required to offer restitution to the 35,000 affected customers and is prohibited from setting sales goals that might encourage the opening of unauthorized accounts in the future. The bank has been ordered to pay a $15 million penalty for the unauthorized accounts and an additional $5 million fine for the unnecessary insurance sales.

The CFPB stated that these shady insurance practices had been ongoing for years, costing customers $12.7 million in what the bureau described as “illegal, worthless” fees. Despite these charges, consumers ended up with duplicative coverage that provided no genuine benefit, all the while boosting Fifth Third’s profits.

The bank responded by stating that the practices involving unauthorized accounts occurred in a “limited number of accounts” from 2010 to 2016, and that it had proactively ended its controversial insurance policy in January 2019 prior to the CFPB’s investigation. Susan Zaunbrecher, Fifth Third’s chief legal officer, emphasized the bank’s commitment to resolving these issues and prioritizing customers.

Previously, in 2013, Fifth Third faced a $21 million fine for discriminatory lending practices affecting Black and Hispanic customers. Despite these issues, the bank, which manages $62 billion in assets and operates 1,087 branches across 12 states, saw Wall Street analysts predict savings from the $20 million fine in terms of reduced future litigation costs.

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