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The Consumer Financial Protection Bureau ordered Fifth Third Bank (NASDAQ:FITB) to pay $20M in penalties in addition to compensating ~35,000 harmed consumers, including ~1,000 who had their cars repossessed, for a range of alleged illegal practices, the regulator said on Tuesday.
Fifth Third (FITB) stock dipped 1.5% in late morning trading.
The CFPB took two actions against the Cincinnati, Ohio-based bank. In the first action, the CFPB alleges that Fifth Third (FITB) forced vehicle insurance on borrowers who didn’t need it, leading to charging unnecessary fees, duplicative coverage and, in some cases, delinquencies and repossessions. The second action resolves CFPB’s March 2020 lawsuit against FITB for creating fake customer accounts and using a “cross-sell” strategy.
The proposed court order bans the company from setting employee sales goals that incentivize fraudulently opening 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,” CFPB director Rohit Chopra said in a statement.
Fifth Third (FITB) didn’t immediately respond to a request for comment.
The CFPB ordered the bank to pay a $5M penalty for the car insurance issue and a $15M penalty for opening fake accounts.
