Fifth Third is fined by US CFPB over fake bank accounts, auto repossessions
Recasts first paragraph; adds Fifth Third statement, accusations, settlement details, no admission of wrongdoing, byline
By Jonathan Stempel
July 9 (Reuters) -Fifth Third Bancorp FITB.O will pay $20 million in civil fines and offer redress to 35,000 harmed consumers to settle U.S. Consumer Financial Protection Bureau charges it opened unauthorized accounts and illegally repossessed their cars.
The Cincinnati-based lender, which has about $215 billion of assets and 1,070 branches mainly in Midwestern and Southeastern U.S. states, did not admit or deny wrongdoing in agreeing to the two settlements announced by the CFPB on Tuesday.
Fifth Third will pay a $15 million fine and refund fees and costs to customers with fake accounts between 2010 and 2016.
It was also banned from setting sales quotas that give employees incentives to open the accounts, through a "cross-selling" strategy that also led to sanctions for other banks including Wells Fargo WFC.N.
Fifth Third will separately pay a $5 million fine and offer compensation to borrowers it forced to obtain car insurance that duplicated coverage they already had, or had their vehicles repossessed if they failed to comply.
The regulator said that between 2011 and 2019, Fifth Third "force-placed" or required unnecessary insurance more than 37,000 times, collected more than $12.7 million of "worthless" fees, and improperly repossessed nearly 1,000 vehicles.
One victim was an insurance agent who said Fifth Third assured him in 2016 that "everything is correct and that I actually do not owe anything," shortly before he woke up one morning to find his car missing.
The fake accounts settlement requires a judge's approval, and would resolve a CFPBlawsuit filed in March 2020.
"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," CFPB Director Rohit Chopra said in a statement.
Susan Zaunbrecher, Fifth Third's chief legal officer, said 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."
Reporting by Jonathan Stempel in New York, Editing by Nick Zieminski
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