Regulator fines Fifth Third $20M for 'illegal' insurance, fake accounts

Fifth Third will pay $20 million in penalties and reimburse 35,000 customers after the federal Consumer Financial Protection Bureau charged the bank with pushing junk auto insurance and opening fake accounts in the names of thousands of customers.

The regulators said the illegal activity took place between July 2011 and December 2020 and resulted in roughly 1,000 customers getting their cars repossessed.

On Tuesday, the agency said the bank will pay $5 million of its penalties for forcing vehicle insurance on borrowers who already had coverage or got it elsewhere. Fifth Third customers paid more than $12.7 million in “illegal, worthless fees” for insurance that provided “no value,” the regulator said.

The regulator also said the bank would pay $15 million in connection with the fake accounts activity and is proposing a court order that would ban the sales quota that it said incentivized the fraud.

“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,” Rohit Chopra, the agency’s director, said in a statement. “We are ordering the senior executives and board of directors at Fifth Third to clean up these broken business practices or else face further consequences.”

Fifth Third officials said Tuesday the fines were part of a settlement with regulators to conclude ongoing consumer probes. Bank officials said they have already taken action and discontinued practices that led to the disputes.

“Today’s settlement concludes both the sales practices litigation with the CFPB, and its separate investigation into certain auto finance servicing activities related to a collateral protection insurance program that the Bank shut down in 2019 before the CFPB began its investigation,” Susan Zaunbrecher, the bank's chief legal officer, in a statement. “We have already taken significant action to address these legacy matters, including identifying issues and taking the initiative to set things right.”

Based in downtown Cincinnati, Fifth Third is a regional bank with nearly 1,100 branches in in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Georgia, North Carolina and South Carolina. With nearly $214 billion in assets and almost 19,000 workers, it is ranked as the nation’s 17^th-largest bank, according to regulator the Federal Reserve.