Home Finance News Fifth Third Bank Fined $20 Million for Fraudulent Accounts, Coercing Customers into Insurance

Fifth Third Bank Fined $20 Million for Fraudulent Accounts, Coercing Customers into Insurance

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Fifth Third Bank Fined $20 Million for Fraudulent Accounts, Coercing Customers into Insurance

Fifth Third Bank has been hit with a $20 million fine by the Consumer Financial Protection Bureau for opening unauthorized accounts in customers’ names and imposing auto insurance on borrowers who already had coverage. This penalty comes alongside redress payments to 35,000 affected consumers, with 1,000 individuals having their vehicles repossessed as a result of the bank’s actions. CFPB Director Rohit Chopra emphasized the need for Fifth Third Bank’s executives and board of directors to rectify these harmful practices to avoid further consequences.

The fine imposed on Fifth Third Bank consists of $15 million for the fraudulent account activities, which initiated a lawsuit by the CFPB back in March 2020. The remaining $5 million addresses the bank’s practice of forcing unnecessary insurance policies onto loan borrowers, resulting in exorbitant fees and vehicle repossessions due to missed payments. In response to the settlement, Fifth Third Bank stated its commitment to adhering to existing policies and developing plans under the CFPB’s supervision to ensure customer remediation and prevent future infractions, signaling a shift towards prioritizing customers’ best interests.

This is not the first time Fifth Third Bank has faced penalties from the CFPB, having been fined previously for discriminatory auto-loan pricing and illegal credit card practices in 2015. With 1,300 branches across 12 states and around $214 billion in assets, the Cincinnati-based bank has been called upon to address and rectify its questionable business practices to uphold transparency and trust among its customer base. The emphasis on remediation and customer-centric values moving forward highlights the bank’s commitment to creating sustainable long-term value for shareholders, customers, employees, and communities.

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