On Mar. 9, 2020, Fifth Third Bank became the subject of a CFPB complaint regarding unauthorized account and product enrollment. The Consumer Financial Protection Bureau alleges that over the course of several years, Fifth Third employees issued new accounts, products, and transfers in consumers’ names without their knowledge or permission. If true, this would violate the Consumer Financial Protection Act, along with several other financial regulations.
What is in the CFPB Complaint Against Fifth Third Bank?
According to the CFPB lawsuit, Fifth Third Bank has promoted an aggressive cross-sell strategy for many years. This encourages employees to sell additional products to existing customers. For example, they would persuade checking account customers to add on Fifth Third credit cards.
Reportedly, employee performance reviews, extra financial incentives, and even continued employment were contingent upon meeting these ambitious sales quotas. It was these factors that allegedly led employees to participate in unlawful practices, including:
- Opening unauthorized accounts and lines of credit under existing customers’ names
- Moved customers’ money into these new, unauthorized accounts
- Enrolled unknowing customers in banking services and credit cards
The complaint further alleges that Fifth Third Bank was aware of these activities, at least between 2008 and 2016. Despite this, CFPB claims that the bank took insufficient measures to stop these practices.
The Alleged Violations
The 8 counts outlined in the Fifth Third Bank lawsuit can fall under multiple pieces of legislation, particularly the Consumer Financial Protection Act of 2010 (CFPA). The CFPA protects consumers from unfair financial practices, including unauthorized enrollment in products or services.
The very act of moving money without consent also violates the Truth in Savings Act, even though the funds were eventually moved back into the original accounts. Furthermore, the Truth in Lending Act requires all lenders to issue disclosures to customers before opening any lines of credit.
What to Expect From This CFPB Lawsuit
Fifth Third Bank members can look to previous CFPB complaints for insight into how this situation will play out. It’s highly reminiscent of the Wells Fargo scandal, which broke in 2016 and was just recently settled.
In that case, Wells Fargo admitted to pressuring its employees, causing them to open an estimated 3.5 million fake accounts unbeknownst to customers. The bank agreed to pay over $7 billion in penalties and take steps to improve its policies.
Similarly, the CFPB asks for an injunction in the Fifth Third lawsuit to stop these practices, as well as a redress for affected customers and monetary penalties. In the meantime, Fifth Third Bank claims that the lawsuit isn’t warranted.
Representatives of the bank announced that internal investigations were already conducted and addressed the 1,100 fraudulent accounts opened. They reported less than $30,000 in damages, and insist the bank handled the matter appropriately.