CINCINNATI — Fifth Third Bank could face $20 million in penalties after The Consumer Financial Protection Bureau took two actions against the bank "for a range of illegal activities."
The fine is broken up into two parts: $5 million for forcing vehicle insurance onto borrowers who had coverage and $15 million for opening fake accounts in the names of its customers. The full fine will be paid if a proposed court order from CFPB is accepted.
The funds would then be deposited into CFPB's victim's relief fund, also known as the Civil Penalty Fund, which helps victims of this kind of activity recuperate finances.
The bank would pay approximately 35,000 harmed consumers, including 1,000 whose cars were repossessed.
CFPB said Fifth Third Bank made borrowers purchase vehicle insurance even though they already had coverage. The bank said if borrowers refused to buy the coverage, they would face the following:
- Delinquency
- Added fees
- Repossessions
"Between July 2011 and December 2020, more than 50% of the policies were charged to borrowers who had either always maintained their own coverage or obtained the requisite coverage within a 30-day timeframe of their prior policy lapsing," CFPB said.
Borrows were "illegally charged fees that provided no value at all" in over 37,000 instances — totaling $12.7 million spent unnecessarily, CFPB said.
According to CFPB, Fifth Third Bank profited from the illegal activity. Once the coverage was canceled, CFPB said borrowers could get a refund. Instead of giving the money back to the borrowers, Fifth Third Bank, "applied the refunds to consumers' outstanding loan balances," 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,” CFPB Director Rohit Chopra said. “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.”
This illegal activity of opening up fake accounts was first addressed in CFPB's lawsuit against the Bank in March 2020.
"The second of the two actions announced today resolves the CFPB’s March 2020 lawsuit against Fifth Third Bank for creating fake customer accounts and using a “cross-sell” strategy to increase the number of products and services it provided to existing customers."
CFPB said Fifth Third Bank is a "repeat offender."
Two other actions were taken against Fifth Third Bank in 2015, "one for discriminatory auto loan pricing, which was a joint CFPB and U.S. Department of Justice action, and the other for illegal credit card practices," CFPB said.
The bank had to pay $18 million to the Black and Hispanic borrowers affected, $3 million to consumers harmed by the illegal credit card practices and a $500,000 penalty.
Fifth Third Bancorp is headquartered in Cincinnati. It has $214 billion in assets, runs approximately 1,300 branches and offers several financial services like:
- Credit cards
- Auto loans
- Mortgages
To find out if you're eligible to receive money from the Civil Penalty Fund, click here.
To find out if you have a payment in process, visit this website. Click the name of the case you need to find out who to reach out to about a possible payment.
Read more:
Fifth Third Bank's short-term lending practices on trial in Cincinnati
Federal jury awards zero damages in Fifth Third loan case
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