On July 9, 2024, the CFPB today took action against repeat offender Fifth Third Bank for a range of illegal activities including illegally loading up auto loan bills with excessive charges and punishing borrowers with repossessions. The order would require the bank to pay a total of $20 million in penalties in addition to paying redress to approximately 35,000 harmed consumers.
Fifth Third Bancorp is a large bank holding company with $214 billion in assets operating approximately 1,300 branches in 12 states and is offering financial services including credit cards, mortgages, home equity lines of credit, and auto loans. In 2015, the CFPB took two actions against the bank – one for discriminatory auto loan pricing and the other for illegal credit card practices.
The CFPB’s order addresses the CFPB’s findings that Fifth Third Bank illegally triggered repossessions and charged illegal fees by forcing loan borrowers into unnecessary and duplicative coverage policies. From July 2011 to December 2020, over half the policies were charged to borrowers who kept their own insurance or got new coverage within 30 days of the old one expiring. According to the CFPB, Fifth Third Bank harmed borrowers by:
Charging extra fees for unnecessary and duplicative coverage. In more than 37,000 instances, Fifth Third Bank illegally charged fees that provided no value at all. In some cases,the policy duplicated what borrowers already had for their vehicles. When the unnecessary or duplicative coverage was cancelled, borrowers were entitled to a refund of the illegally charged fees. But instead of refunding the money directly to borrowers, Fifth Third Bank applied the refunds to consumers’ outstanding loan balances.
Punishing borrowers with repossessions. Fifth Third Bank demanded borrowers pay for coverage they did not need or else face delinquency, additional fees, and repossessions.
The second of the CFPB’s two actions resolves the CFPB’s March 2020 lawsuit against Fifth Third Bank for creating fake customer accounts and using a “cross-sell” strategy to increase the number of products and services it provided to existing customers.
The CFPB’s order requires and, if entered by the court, the proposed order would require the bank to:
Pay redress to about 35,000 harmed consumers;
Prohibit the bank from setting sales goals for its employees that incentivize the opening of unauthorized accounts; and
Pay a $5 million penalty for its illegal activity, and if the court enters the proposed order, a $15 million penalty for opening unauthorized accounts.
Read the CFPB’s press release here.
The order on illegal auto lending practices can be found here.
The proposed court order on fake accounts can be found here.