WASHINGTON—The Consumer Financial Protection Bureau has filed suit against Fifth Third Bank alleging for several years the bank opened different accounts in customers’ names without their knowledge.
The lawsuit, filed in federal district court in the Northern District of Illinois, alleges illegal activities that sound very similar to those that took place at Wells Fargo, where millions of bogus accounts were opened. Wells Fargo has now paid more than $3 billion in fines as a result, and is the subject of two congressional hearings this week.
According to the CFPB complaint, Cincinnati-based Fifth Third Bank opened deposit and credit-card accounts in consumers’ names; transferred funds from consumers’ existing accounts to new, improperly opened accounts; enrolled consumers in unauthorized online-banking services; and activated unauthorized lines of credit on consumers’ accounts, all without customers’ knowledge or consent.
Activity Allegedly Went on for Years
The Bureau is alleging Fifth Third violated the Consumer Financial Protection Act’s prohibition against unfair and abusive acts or practices as well as the Truth in Lending Act and the Truth in Savings Act and their implementing regulations.
According to the Bureau, for years and continuing through at least 2016, Fifth Third used a “cross-sell” strategy to increase the number of products and services it provided to existing customers; used an incentive-compensation program to reward selling new products; and conditioned employee-performance ratings and, in some instances, continued employment on meeting ambitious sales goals.
The Bureau is further alleging that despite knowing since at least 2008 employees were opening unauthorized consumer-financial accounts, Fifth Third took insufficient steps to detect and stop the conduct and to identify and remediate harmed consumers.
Not Carefully Monitored
“Reasonable sales goals and performance incentives are not inherently harmful,” the Bureau said in announcing its action. “But when such programs are not carefully and properly implemented and monitored, as the Bureau alleges here, they may create incentives for employees to engage in misconduct in order to meet goals or earn additional compensation.”
The CFPB is seeking an injunction to stop Fifth Third’s unlawful conduct, redress for affected consumers, and the imposition of a civil money penalty.
The complaint is available here.