The Consumer Financial Protection Bureau (CFPB) is punishing a U.S. bank for predatory lending practices and illegal seizures of people’s assets.
The CFPB says Fifth Third Bank harmed 35,000 customers, including about 1,000 people who had their cars repossessed.
According to the agency, the bank forced customers who already had auto insurance to pay for additional coverage, imposing unnecessary fees on customers and then repossessing their cars when they became overwhelmed.
Says CFPB Director Rohit Chopra:
“The CFPB caught Fifth Third Bank illegally overcharging auto loan accounts with excessive fees, causing nearly 1,000 families to lose their cars to repossession. We charge Fifth Third’s senior executives and board of directors to clean up these broken business practices or face further consequences.”
The CFPB says that in 37,000 cases, Fifth Third Bank illegally charged fees that “provided no value at all,” and that in some cases the policies they imposed on customers duplicated the coverage borrowers already had on their vehicles.
Fifth Third Bank ended up charging their customers more than $12.7 million in “illegal, worthless fees.”
The CFPB says that once these policies were canceled, customers were entitled to refunds from Fifth Third Bank, but instead of doing so, the bank applied the refunds to consumers’ outstanding credit balances.
Additionally, Fifth Third Bank set sales goals for their employees, which eventually led to them opening fake accounts under their customers’ names and identities to create the illusion of high sales.
The bank is now ordered to pay a $5 million fine in relation to the car insurance sales scheme, and a $15 million fine in relation to opening counterfeit accounts. The CFPB also wants Fifth Third to make whole the 35,000 people harmed by the scheme, and to ban sales targets for its employees that encourage the opening of unauthorized accounts.
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