After the federal Consumer Financial Protection Bureau accused Fifth Third of promoting junk auto insurance and opening phony accounts in the names of thousands of customers, the bank will be required to pay $20 million in penalties and reimburse 35,000 customers.
Between July 2011 and December 2020, the regulators reported that approximately 1,000 customers had their vehicles seized as a consequence of the illicit activity. According to the agency, the bank will be required to pay $5 million in penalties for requiring vehicle insurance on borrowers who either had coverage or obtained it elsewhere. This announcement was made on Tuesday. According to the regulator, Fifth Third customers paid over $12.7 million in “illegal, worthless fees” for insurance that was “of no value.”
“In a statement, Rohit Chopra, the director of the Consumer Financial Protection Bureau (CFPB), disclosed that Fifth Third Bank had been unlawfully accumulating excessive charges on auto loan bills, resulting in the repossession of nearly 1,000 vehicles for families.” “We are issuing a directive to the senior executives and board of directors of Fifth Third to rectify these deficient business practices, or else they will be subjected to additional repercussions
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According to Fifth Third officials on Tuesday, the penalties were imposed as part of a settlement with regulators to conclude ongoing consumer investigations. According to bank officials, they have already discontinued the practices that precipitated the disputes.
The regulator also announced that the bank would be required to pay $15 million in connection with the phony account activity. Additionally, the regulator is proposing a court order that would prohibit the sales quota, which it claimed incentivized the fraud.
The bank’s chief legal officer, Susan Zaunbrecher, issued a statement stating that the settlement reached today concludes both the sales practices litigation with the CFPB and its separate investigation into specific auto finance servicing activities related to a collateral protection insurance program that the bank discontinued in 2019 prior to the CFPB’s commencement of its investigation. “We have already taken substantial steps to resolve these legacy issues, such as identifying the issues and taking the initiative to rectify them.”
Fifth Third is a regional bank with roughly 1,100 branches in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Georgia, North Carolina, and South Carolina. The bank is headquartered in downtown Cincinnati. According to the Federal Reserve, it is the 17th-largest bank in the United States, with nearly $214 billion in assets and nearly 19,000 employees.
