Home Business Fifth Third Bank Settles Auto Insurance Allegations for $5 Million in Settlement

Fifth Third Bank Settles Auto Insurance Allegations for $5 Million in Settlement

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Fifth Third Bank Settles Auto Insurance Allegations for $5 Million in Settlement

Fifth Third Bank has reached a settlement to pay millions of dollars to resolve allegations of imposing additional car insurance policies on auto loan customers, resulting in higher monthly payments and even vehicle repossessions for those unable to afford the added costs. The Consumer Financial Protection Bureau found that the bank wrongly enforced around 37,000 insurance policies from 2011 to 2019, leading to a penalty of $5 million and mandatory compensation for affected individuals. CFPB Director Rohit Chopra criticized Fifth Third for burdening families with unnecessary charges, causing over 1,000 car repossessions due to financial strain.

Fifth Third Bank has stated that the auto insurance practices highlighted by CFPB were discontinued voluntarily in 2019, preceding the agency’s investigation. The bank’s chief legal officer, Susan Zaunbrecher, emphasized that steps were taken to rectify the situation and acknowledge the issues promptly. This settlement comes following a separate $15 million agreement in 2020 to address allegations of improperly opening accounts during a certain period, reflecting ongoing regulatory scrutiny on the bank’s practices.

The CFPB’s probe revealed that Fifth Third’s auto loans included a controversial “force-placed insurance” provision that automatically applied insurance coverage for customers without existing policies. Many affected individuals were already insured or obtained new coverage soon after, making the additional policies redundant and costly. The agency highlighted the higher premiums associated with these policies, leading to an average monthly increase of almost $200 for borrowers, ultimately causing financial strain and loan delinquency for many customers.

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