On Tuesday, Fifth Third Bank announced that it has agreed to pay $20 million in penalties to settle an investigation by the Consumer Financial Protection Bureau (CFPB) into its auto insurance practices. This settlement also addresses a 2020 lawsuit filed by the CFPB concerning the bank’s creation of fake customer accounts.
The CFPB imposed these penalties on Fifth Third Bank for illegally charging customers for unnecessary auto insurance policies. The bureau estimates that this practice harmed more than 35,000 customers, leading to the repossession of vehicles for over 1,000 individuals.
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“Fifth Third Bank demanded borrowers pay for coverage they did not need, threatening them with delinquency, additional fees, and repossessions,” the agency stated. “The bank conducted repossessions of vehicles when the delinquency was caused by charging for unnecessary and duplicative coverage.”
- Fifth Third Bank has agreed to a $20 million settlement with the CFPB.
- The penalties are related to the bank’s auto insurance practices and the creation of fake customer accounts.
- Over 35,000 customers were harmed, with more than 1,000 facing vehicle repossession.
- The bank charged customers for unnecessary auto insurance policies, leading to financial strain and repossessions.
This settlement highlights the importance of fair and transparent banking practices. It serves as a reminder for financial institutions to adhere to ethical standards and protect their customers from unnecessary financial burdens.
The bank, headquartered in Cincinnati, Ohio, operates branches across 12 states, primarily in the Midwest and Southeast regions.
Penalties for Illegal Auto Insurance Activities
Due to its illegal auto insurance activities, the bank has been ordered to pay $5 million in redress to affected customers, according to the CFPB. The agency is demanding that the bank “clean up these broken business practices or else face further consequences,” noted CFPB Director Rohit Chopra.
Proposed Penalty for Fake Customer Accounts
Additionally, the CFPB announced on Tuesday that it had filed a proposed court order requiring the bank to pay $15 million in penalties for practices that incentivized employees to create fake customer accounts. The proposed order also bans the bank from “setting employee sales goals that incentivize fraudulently opening accounts,” the CFPB stated.
Statements from Fifth Third Bank
“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,” said Susan Zaunbrecher, Chief Legal Officer of Fifth Third. “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.”