CFPB Director Rohit Chopra said the bank had been “illegally loading up auto loan bills with excessive charges,” with about 1,000 families losing their cars to repossession as a result.
“We are ordering the senior executives and board of directors at Fifth Third to clean up these broken business practices or else face further consequences,” Chopra said.
The bank said the auto insurance practices singled out by CFPB had already been voluntarily ended in 2019, before the agency began its investigation.
“We have already taken significant action to address these legacy matters, including identifying issues and taking the initiative to set things right,” Fifth Third Bank chief legal officer Susan Zaunbrecher said in a statement.
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It is the CFPB’s latest action against the bank, which in 2020 was accused of improperly opening accounts from 2010 until at least 2016. Fifth Third agreed Tuesday to pay $15 million to address those allegations.
The allegations about insurance policies are a separate issue, stemming from a division of the bank that works with car dealers to offer auto loans.
For years, Fifth Third’s auto loans contained a “collateral protection insurance” provision allowing it to automatically add coverage for customers who don’t have their own ― a practice described by the CFPB as “force-placed insurance.”
The provision was meant to give the bank a way to protect the loan collateral: the car itself. But more than half of the bank’s force-placed policies were applied to customers who were already insured or got new insurance within 30 days of an earlier policy lapsing, the CFPB said.
“Fifth Third continued to force place insurance for years, demanding that consumers pay for insurance they did not need or else face delinquency, additional fees, and even repossession,” the agency alleged.
The CFPB said the insurance policies carried higher premiums than owners could have obtained elsewhere, adding an average of almost $200 to a borrower’s monthly car payment.
Those charges, CFPB said, were unlawful and led some customers to fall delinquent on their loans, with 1,005 customers having their vehicles repossessed. The force-placed insurance program ended in 2019, according to the CFPB and the bank.
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July 10, 2024 at 04:32AM
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Fifth Third Bank to pay $5 million to settle auto insurance allegations - The Washington Post
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