The Consumer Financial Protection Bureau (CFPB) is penalizing a US bank for predatory loan practices and illegal repossession of people’s assets.
The CFPB says that Fifth Third Bank harmed 35,000 customers, including roughly 1,000 people who had their cars repossessed.
According to the agency, the bank forced customers who already had car insurance to pay for additional coverage, imposing unnecessary fees on clients, and then repossessing their cars when they became overwhelmed.
Says CFPB Director Rohit Chopra,
“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. 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.”
The CFPB says that in 37,000 instances, Fifth Third Bank illegally charged fees that “provided no value at all,” and in some cases, the policy that they forced upon customers was duplicative of coverage the borrowers already had on their vehicles.
Fifth Third Bank ultimately made their clients pay over $12.7 million in “illegal, worthless fees.”
The CFPB says that once those policies were canceled, customers were entitled to refunds from Fifth Third Bank, but instead of doing that, the bank applied the refunds to consumers’ outstanding loan balances.
In addition, Fifth Third Bank set sales goals for their employees, which ultimately led to the opening of fake accounts under the names and identities of their customers in order to create the illusion of high sales.
The bank is now being ordered to pay a $5 million penalty in regard to the vehicle insurance sales scheme, and a $15 million penalty in regard to the opening of fake accounts. The CFPB also wants Fifth Third to make the 35,000 people harmed by the scheme whole, as well as banning sales goals for its employees that incentivize the opening of unauthorized accounts.
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