Monday, 2 Oct 2023

U.S. consumer watchdog charges Fifth Third Bank on opening phony accounts

WASHINGTON (Reuters) – The U.S. Consumer Financial Protection Bureau (CFPB) said on Monday it charged Fifth Third Bank, National Association, for creating fake client deposit and credit-card accounts and transferring clients’ funds to those accounts without consent, citing an abuse of fair lending and savings laws.

The Cincinnati-based lender did not admit or deny the consumer watchdog’s allegations that it engaged in unauthorized account openings and money transfers, the CFPB said in a statement.

“Despite knowing since at least 2008 that 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,” the CFPB said.

It also alleged that the program “created incentives for employees to engage in misconduct in order to meet goals or earn additional compensation” at least until 2016.

The CFPB’s charges follow the pursuit of U.S. financial regulators to stamp out fair lending and savings abuses by another national lender, Wells Fargo & Co (WFC.N). Wells Fargo agreed last month to pay $3 billion to resolve criminal and civil probes of fraudulent sales practices and admitted to pressuring employees in a fake-accounts scandal. nL1N2AL137

That scandal led to the resignation of two directors on Monday. nL4N2B235I

The consumer watchdog said it was seeking legal permission to stop First Third’s conduct, seek redress for customers and impose a money penalty.

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