The Consumer Financial Protection Bureau (CFPB) imposed a $20 million fine on Fifth Third Bank for allegedly coercing auto loan customers into purchasing unnecessary car insurance policies and repossessing their vehicles when they defaulted. Director Rohit Chopra criticized the bank for burdening customers with excessive charges, resulting in nearly 1,000 families losing their cars to repossession. The CFPB ordered senior executives and the board of Fifth Third to rectify these unethical practices or face further consequences, emphasizing the need for accountability within the bank’s leadership.
Additionally, Fifth Third Bank is accused of opening fake bank accounts for thousands of customers without their consent in an effort to meet sales goals set by top management. The CFPB lawsuit settled in March 2020 highlighted these unauthorized bank accounts, linking them to performance reviews and employment status of Fifth Third bank managers. As part of the punishment, Fifth Third is required to compensate the affected customers and discontinue creating sales goals that encourage employees to open fake accounts, thus preventing future deceitful practices within the institution.
The bank must pay a $15 million penalty for the unauthorized bank accounts and an additional $5 million for forcing customers with existing auto insurance coverage to purchase duplicative policies. The CFPB disclosed that Fifth Third charged customers for duplicate coverage, even when they already had insurance from another company. Despite Fifth Third’s claims of addressing these issues and discontinuing the auto insurance practice voluntarily, they are still held accountable for exploiting customers by charging them for worthless fees, amounting to $12.7 million in illegal charges.
