Ohio Bank Fined $20M for Fake Accounts and Illegal Car Repossessions

Fifth Third Bank has agreed to pay $20 million in penalties following an investigation by the Consumer Financial Protection Bureau (CFPB) into its auto insurance practices and the creation of fake customer accounts. The settlement addresses two major issues: excessive auto loan charges leading to repossessions and the opening of unauthorized customer accounts.

CFPB Director Rohit Chopra announced that the bank was fined $5 million for its auto loan practices, which resulted in nearly 1,000 families losing their cars due to illegal charges added to their auto loan bills. In his statement, Chopra emphasized the need for the bank’s senior executives and board of directors to rectify these harmful business practices or face further repercussions.

In addition to the auto loan penalties, Fifth Third Bank was fined another $15 million for opening fraudulent accounts in the names of its customers. The CFPB filed a proposed court order banning the bank from setting employee sales goals that encourage such fraudulent activities. As part of this punishment, Fifth Third must compensate the 35,000 customers who were affected by these unauthorized accounts. The CFPB revealed that these customers collectively paid over $12.7 million in illegal and worthless fees, from which the bank profited while providing no actual value to the consumers.

Susan Zaunbrecher, the chief legal officer of Fifth Third, released a statement affirming that the bank had reached a comprehensive settlement with the CFPB. She explained that this settlement concludes the CFPB’s litigation regarding sales practices and a separate investigation into the bank’s auto finance servicing activities related to a collateral protection insurance program that was discontinued in 2019 before the CFPB’s investigation began. Zaunbrecher highlighted that Fifth Third has taken significant steps to address these legacy issues, including identifying problems and initiating corrective actions. She emphasized the bank’s commitment to prioritizing its customers and moving forward to create sustainable long-term value for shareholders, customers, employees, and communities.

The resolution of these issues allows Fifth Third Bank to focus on rebuilding trust and ensuring that such practices do not occur again in the future.