Cincinnati, Ohio – Fifth Third Bank has reached a settlement agreement to pay a substantial sum following accusations of pushing auto loan customers into unnecessary car insurance policies. These policies ultimately led to higher monthly payments for customers, resulting in vehicle repossessions for some who were unable to meet the financial burden.
The Consumer Financial Protection Bureau (CFPB) revealed in court documents that approximately 37,000 insurance policies were improperly imposed by the Ohio-based bank between 2011 and 2019. As part of the settlement, Fifth Third Bank will pay a $5 million penalty and provide redress for affected customers.
CFPB Director Rohit Chopra condemned the bank for loading auto loan bills with excessive charges, resulting in the repossession of around 1,000 vehicles from families. He demanded that senior executives and the board of directors at Fifth Third rectify these unlawful practices or face further consequences.
Despite Fifth Third Bank’s claim that it voluntarily ceased the auto insurance practices in question in 2019, the CFPB proceeded with its investigation and subsequent enforcement actions against the financial institution. The bank’s chief legal officer, Susan Zaunbrecher, stated that significant measures had already been taken to address the identified issues.
This recent settlement marks the CFPB’s latest engagement with Fifth Third Bank, following a prior dispute in 2020 where the bank was accused of opening unauthorized accounts from 2010 to at least 2016. In that case, Fifth Third agreed to pay $15 million to address the allegations.
The controversy surrounding the insurance policies stems from Fifth Third Bank’s collaboration with car dealers to provide auto loans. Specifically, the bank’s auto loans included a provision for “collateral protection insurance,” allowing them to add coverage for customers lacking their insurance. This practice, referred to as “force-placed insurance” by the CFPB, has raised significant concerns.
The CFPB noted that over half of the bank’s force-placed policies were applied to customers who were already insured or obtained new insurance shortly after a previous policy had lapsed. These policies often came with higher premiums, significantly increasing borrowers’ monthly payments by nearly $200. Such charges were deemed unlawful and resulted in customers falling behind on their payments, with over 1,000 individuals facing vehicle repossessions.
Both the CFPB and Fifth Third Bank acknowledged that the force-placed insurance program had ended in 2019, but the repercussions of these actions continue to impact affected customers. The bank’s commitment to rectifying these issues moving forward remains a focal point of ongoing discussions between the financial institution and regulatory authorities.
