The Consumer Financial Protection Bureau yesterday announced a pair of enforcement actions against Fifth Third Bank, including force-placing unnecessary auto insurance and opening unauthorized accounts. The bank will pay fines and customer restitution in the amount of $20 million.
The Big Picture: Fifth Third Bank, with $214 billion in assets, is facing penalties for two separate issues:
- Force-placed auto insurance: The bank illegally charged borrowers for unnecessary and duplicative auto insurance policies. Borrowers who could not pay for the unnecessary insurance faced delinquencies, additional fees, and repossession of their vehicles.
- Fake accounts: The CFPB alleges the bank opened unauthorized accounts to meet sales goals.
Making Changes: The CFPB’s action addresses both consumer harm and the underlying incentives that led to the violations.
- The proposed order would ban sales goals that incentivize opening unauthorized accounts.
- Fifth Third must refund affected consumers and correct negative credit reporting.
By the numbers: A summary of the financial penalties being levied against the bank:
- $20 million in total penalties
- $5 million for forced auto insurance
- $15 million for fake accounts (proposed)
- 35,000 consumers to receive redress
The Last Word: “We have already taken significant action to address these legacy matters, including identifying issues and taking the initiative to set things right,” said Susan Zaunbrecher, chief legal officer of Fifth Third. “We consistently put our customers at the center of everything we do. We are pleased to put these historical matters behind us so we can continue to focus on creating sustainable long-term value for our shareholders, customers, employees and in our communities.”
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