Fifth Third Bank Charged By CFPB For Opening Fake Accounts
10 Mar 2020
Approx Reading time: 2 minutes
- The CFPB has revealed in a statement that it has charged Fifth Third Bank with opening fake accounts and moving funds belonging to existing customers without their knowledge.
- Fifth Third also allegedly encouraged its employees to conduct such practices through incentive programs, according to the statement.
- The consumer watchdog is now seeking legal authority to demand the Fifth Third Bank to stop such activities, to offer a remedy to affected customers, and also impose a monetary penalty.
- This case follows the Wells Fargo fake-accounts scandal which has recently resulted in the resignation of two directors at the bank.
According to a statement
released by the Consumer Financial Protection Bureau (CFPB) in the US, the Fifth Third Bank, National Association, has been charged with creating fake client accounts for credit cards and deposits and using funds belonging to existing clients to such accounts without their knowledge. As per the statement, such actions by Fifth Third are in violation of fair lending and savings laws. The lender, based in Cincinnati, did not accept or deny the allegations made by the CFPB, according to the statement. The charges made by the CFPB blame Fifth Third for not taking sufficient measures to identify and control known instances of unauthorized account openings by its employees. As per the CFPB, Fifth Third had knowledge of its employees conducting such practices since 2008, yet so far it has implemented inadequate steps to stop them. Also, it did not make enough effort to identify and offer a remedy to those customers that have been harmed due to such practices. Instead, as per the statement, the program at the firm incentivized employees to engage in potentially harmful practices by setting goals and benchmarks, and additional compensation for those who met them. The charges made by the CFPB follow another case filed by regulators against Wells Fargo & Co, for having abused fair lending and savings laws. In February, Wells Fargo reached an agreement whereby it would pay $3 billion for the resolution of probes made in both criminal and civil capacities against fraudulent practices in sales after the lender admitted that it had pressurized its employees in the fake-accounts scandal. On Monday, two directors at Wells Fargo resigned
as a consequence of the scandal. As for Fifth Third, the consumer watchdog is now leveraging the legal system and seeking permission to stop fraudulent conduct at the firm, seek remedial action for impacted customers, and also impose a monetary penalty on the firm for its actions.