Action against ‘repeat offender’ Fifth Third Bank seeks $20 million in redress for auto repos, opening fake accounts

Alleged wrongful triggering of auto repossessions, and purported opening of fake bank accounts, has led Tuesday to the federal consumer financial protection agency to seek $20 million in penalties from one of the nation’s largest banks.

The Consumer Financial Protection Bureau (CFPB) said, in action against Fifth Third Bank of Cincinnati, Ohio – the nation’s 15th largest bank which the agency tagged a “repeat offender” – for “a range of illegal activities” that would result in redress to about 35,000 customers of the banks affected by the activities. (The agency noted that nine years ago it took two actions against the bank – one for discriminatory auto loan pricing and the other for illegal credit card practices.)

“Specifically, the CFPB is ordering Fifth Third Bank to pay a $5 million penalty for forcing vehicle insurance onto borrowers who had coverage,” the agency said in a release. “The CFPB also filed a proposed court order that would require Fifth Third Bank to pay a $15 million penalty for opening fake accounts in the names of its customers. The proposed court order bans Fifth Third Bank from setting employee sales goals that incentivize fraudulently opening accounts.”

CFPB charged that the bank, which holds more than $213 billion in assets, illegally triggered repossessions and charged illegal fees by forcing loan borrowers into unnecessary and duplicative coverage policies.

“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 claimed.

Specifically, CFPB asserted that Fifth Third Bank’s conduct harmed borrowers by charging extra fees for unnecessary and duplicative coverage and by punishing borrowers with repossessions.

The agency said it is asking the court to make the 35,000 harmed consumers whole, ban sales goals that led to fake accounts, and pay the $20 million in fines.

Regarding opening of alleged fake accounts, the CFPB said the penalty would resolve its March 2020 lawsuit against the 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 Takes Action Against Fifth Third for Wrongfully Triggering Auto Repossessions and Opening Fake Bank Accounts

Be the first to comment

Leave a Reply

Your email address will not be published.