The Consumer Financial Protection Bureau (CFPB) is suing a U.S. bank for predatory lending practices and illegally taking assets from people.
Fifth Third Bank harmed 35,000 customers, including about 1,000 who had their cars repossessed, according to the CFPB.
According to the agency, the bank forced customers who already had car insurance to pay for additional coverage, charging customers unnecessary fees, and then repossessed their cars when they were unable to cope.
CFPB Director Rohit Chopra says:
“The CFPB caught Fifth Third Bank illegally overloading auto loan accounts with excessive payments, causing nearly 1,000 families to lose their vehicles due to repossession. We direct Fifth Third's senior management and board of directors to correct these disrupted business practices or face further consequences."
According to the CFPB, in 37,000 cases, Fifth Third Bank illegally charged fees that had “no value,” and in some cases, the insurance policy they pushed on customers duplicated coverage the borrowers already had on their vehicles.
Fifth Third Bank ultimately forced its customers to pay more than $12.7 million in “illegal and unnecessary fees.”
The CFPB contends that after these policies were rescinded, customers were entitled to a refund from Fifth Third Bank, but the bank instead applied the refund to the consumers' outstanding loan balances.
In addition, Fifth Third Bank set sales goals for its employees, which ultimately resulted in the opening of false accounts in the names and identification of its customers in order to create the illusion of high sales.
The bank is now ordered to pay a $5 million fine for the vehicle insurance sales scheme and a $15 million fine for opening fake accounts. The CFPB also wants Fifth Third to pay damages to the 35,000 people harmed by the scheme and to prohibit its employees from setting sales targets that incentivize the opening of unauthorized accounts.
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