Consumer bureau alleges Fifth Third Bank opened unauthorized accounts for customers

The Consumer Financial Protection Bureau (CFPB) on Monday sued Fifth Third Bank, alleging that it opened and charged fees on bank and credit card accounts for customers without their consent.

In a complaint filed in the U.S. District Court for the Northern District of Illinois, the CFPB alleges that since 2008, Fifth Third ignored repeated warnings that employees were opening unauthorized accounts in order to meet ambitious sales goals that could make or break their careers.

Fifth Third took insufficient steps to properly implement and monitor its program, detect and stop misconduct, and identify and “remediate harmed consumers,” the CFPB alleged, claiming the bank prized “its own financial interests to the detriment of consumers.”

The CFPB alleges eight counts of violating federal consumer protection and banking laws, including the Dodd-Frank Wall Street Reform and Consumer Protection Act, the 2010 law that created the bureau.

The CFPB has asked the court to force Fifth Third to compensate allegedly defrauded customers, help amend credit reports that were damaged by the alleged conduct, pay a civil money penalty and cover the legal costs of the bureau’s suit.

“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 alleged.

Susan Zaunbrecher, chief legal officer for Fifth Third, called the CFPB suit unnecessary and unwarranted” in a Monday statement, saying the bank will “defend itself vigorously and is confident in the outcome.”

“After an investigation spanning more than three years and involving nearly half a billion pieces of data produced by the Bank, the CFPB has not informed us of any unauthorized accounts beyond the fewer than 1,100 accounts that the Bank itself identified out of 10 million – or approximately 0.01 percent of accounts opened between 2010 and 2016,” Zaunbrecher said. 

“These accounts involved less than $30,000 in improper customer charges that were ultimately waived or reimbursed to customers years ago. While even a single unauthorized account is one too many, we took appropriate and decisive action to address each situation.”

The CFPB’s allegations against Fifth Third closely resemble the practices and sales incentives adopted by Wells Fargo that earned the bank unprecedented federal scrutiny and punishment.

Wells Fargo has been forced to pay billions of dollars in fines and legal settlements, banned since 2018 from expanding in size and subject to strict federal orders to overhaul its internal controls and oversight.

Two members of Wells Fargo’s board of directors, including chairwoman and former Federal Reserve Governor Elizabeth “Betsy” Duke, resigned effective Sunday ahead of a Wednesday appearance before House lawmakers.

Duke and former director James Quigley were set to face questions from the House Financial Services Committee on Wednesday after a report released by its Democratic members documented extensive missteps by senior Wells Fargo management. 

Wells Fargo chief executive Charles Scharf, who joined the bank in September, is set to testify before the Financial Services panel on Tuesday and detail his efforts to steer the bank back toward the good graces of federal regulators. 

Updated 5:35 p.m.