The Consumer Financial Protection Bureau (CFPB) filed a lawsuit in an Illinois federal district court Monday against Fifth Third Bank, alleging that for years the bank opened bogus credit card and checking accounts for customers without their knowledge or consent.
The CFPB complaint alleges that since at least 2008 until 2016, Fifth Third Bank opened the unauthorized accounts and charged customers fees for them, ignoring repeated warnings that its employees were engaging in these unlawful sales practices to meet aggressive sales goals.
The federal regulator also alleges that the bank failed to take sufficient measures to detect and stop the misconduct and identify and compensate harmed consumers because it valued “its own financial interests to the detriment of consumers.”
Multiple alleged violations
In some cases, Fifth Third Bank employees moved money from a customer’s existing account to the unauthorized new one to comply with the company’s sales program policies requiring new accounts to be funded. Moving customers’ money without their consent violates the Truth in Lending Act and the Truth in Savings Act.
The CFPB alleges a total of eight counts federal consumer protection and banking law violations, including the Dodd-Frank Wall Street Reform and Consumer Protection Act, which created the CFPB in 2010 to guard against rampant bank fraud that tanked the U.S. economy in 2008-2009.
Greed: Wells Fargo style
Fifth Third Bank employees ceased creating fake customer accounts in 2016, the same year that Wells Fargo admitted that its employees unlawfully opened unauthorized credit card and deposit accounts for customers to meet aggressive sales targets.
Wells Fargo was forced to pay billions of dollars in fines and legal settlements associated with its bank fraud schemes and has been banned since 2018 from expanding in size. The bank was forced to overhaul its internal controls and oversight and remains under strict federal scrutiny.
“Fifth Third’s sales practices were likely to cause substantial injury to consumers, including adverse effects on their consumer-reporting-agency information, the imposition of unjustified fees, the theft of funds or private information, and the inability to meet financial obligations. This substantial injury to consumers is a predictable consequence of Fifth Third’s sales practices,” the CFPB lawsuit alleges.
Compensation, penalties, fees
The CFPB seeks compensation and amended credit reports for the affected Fifth Third Bank customers and legal fees associated with the lawsuit. The agency also asked the court to assess civil penalties on the bank for its federal and baking law violations.
Susan Zaunbrecher, chief legal officer of the bank, downplayed the alleged fraud, saying it affected only 1,100 customer accounts with financial damages amounting to less than $30,000, according to the Associated Press. She called the CFPB’s lawsuit “unnecessary and unwarranted.”
Fifth Third Bank is based in Cincinnati and operates more than 1,000 branches in the Midwest and South. Its assets exceed $150 billion.
Lawyers at Beasley Allen have handled a variety of claims for individuals who have been affected by Wells Fargo’s fraudulent activity. For more information on this subject, contact Dee Miles, Consumer Fraud Section Head, or other lawyers in the section who are working on these types of cases: Lance Gould, Leslie Pescia, James Eubank, Rachel Boyd and Paul Evans.