Today, Fifth Third Bank has agreed to pay $20 million in penalties imposed by the Consumer Financial Protection Bureau to settle a CFPB investigation into its auto insurance practices and a 2020 lawsuit relating to the bank’s creation of fake customer accounts.
According to the CFPB, the bank illegally charged customers for unnecessary auto insurance policies, causing harm to more than 35,000 customers and resulting in vehicle repossession for over 1,000 of them.
The agency stated, “Fifth Third Bank demanded borrowers pay for coverage they did not need or else face delinquency, additional fees, and repossessions. Fifth Third Bank conducted repossessions of vehicles when the delinquency was caused by the bank charging unnecessary and duplicative coverage.”
Headquartered in Cincinnati, Ohio, the bank operates branches in 12 states, primarily in the Midwest and Southeast.
As part of the settlement for its illegal auto insurance activities, the bank must pay $5 million in redress to affected customers. CFPB director Rohit Chopra highlighted that the agency is ordering the bank to “clean up these broken business practices or else face further consequences.”
Additionally, CFPB announced that it had filed a proposed court order requiring the bank to pay $15 million in penalties related to practices that incentivized employees to create fake customer accounts. The proposed order also prohibits Fifth Third from setting employee sales goals that incentivize fraudulently opening accounts.
Susan Zaunbrecher, chief legal officer of Fifth Third, stated, “Today’s settlement concludes both the sales practices litigation with the CFPB, and its separate investigation into certain auto finance servicing activities related to a collateral protection insurance program that the Bank shut down in 2019 before the CFPB began its investigation. We have already taken significant action to address these legacy matters, including identifying issues and taking the initiative to set things right. We consistently put our customers at the center of everything we do.”
The penalties will be paid into the CFPB’s victim relief fund.
This is not the first time the CFPB has taken action against Fifth Third. In 2015, the bank was ordered to pay $18 million to harmed Black and Hispanic borrowers for discriminatory auto loan pricing and was also ordered to pay $3 million to harmed consumers and a $500,000 penalty for illegal credit card practices.
