The Consumer Financial Protection Bureau (CFPB) has taken action against Fifth Third Bank – or as the agency framed the bank, “repeat offender" Fifth Third.
The agency accuses the vank of illegal actions that impacted nearly 40,000 consumers, including about 1,000 who had their vehicles repossessed.
Fifth Third will pay dearly for its no-nos: $20 million in penalties in addition to paying restitution to the tens of thousands of customers it harmed.
The CFPB is also proposing that the bank pay another $15 million penalty for opening fake accounts in the names of its customers, but the bank got off easy there. Wells Fargo got fined $3 billion for doing pretty much the same thing.
The proposed court order prohibits Fifth Third Bank from setting employee sales goals that reward opening fake accounts.
“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,” said CFPB Director Rohit Chopra. “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 is not the first time
Fifth Third should’ve sat up and taken notice of how the CFPB felt about how it did business nine years ago. In 2015, the bank had its first run-in with the CFPB over two other infractions – one for discriminatory auto loan pricing, and another for illegal credit card practices.
For the discriminatory auto loan pricing action, Fifth Third Bank was ordered to pay $18 million to harmed Black and Hispanic borrowers at the time. For the illegal credit card practices, the bank was ordered to pay $3 million to harmed consumers and a $500,000 penalty.
A wicked repossession and insurance game
As far as the CFPB determining that Fifth Third played a sneaky game with car loans, two things landed the bank in hot water:
Unfair fees: The bank charged borrowers extra for car insurance that those people didn't even need. This happened in over 37,000 cases to the tune of over $12 million that went right into the bank’s pockets. What really chapped the CFPB is that the bank kept the money instead of giving it back.
Wrongful repossessions: If borrowers didn't pay for the unnecessary insurance Fifth Third was hawking, the bank threatened to take away their cars. And this occurred even when some of the borrowers already had insurance or got it quickly after a lapse.