Bank Regulation

Fifth Third Faces CFPB Probe Over Fake Accounts

Fifth Third Bank said it’s facing enforcement action from the Consumer Financial Protection Bureau (CFPB) over alleged openings of unauthorized accounts.

The CFPB said it plans to file enforcement action over the generation of fake accounts allegedly done by employees of Fifth Third. There was a filing Monday with the U.S. Securities and Exchanges Commission, though no timeline on further action was given yet.

Fifth Third said it did not know how big the enforcement action would be and that it had set aside “reasonable reserves” for whatever comes next.

The bank said the allegations don’t merit an enforcement proceeding. The bank said it will defend itself “vigorously.” A spokesperson for the bank, Laura Trujillo, said the company had cooperated with the CFPB, but offered no other comments.

The extent of the alleged unauthorized account activity has yet to be revealed, and it was also unknown how long the activity had been going on.

The charges against Fifth Third are not unique. Wells Fargo has also been embroiled in a scandal over fake accounts, in which employees of that bank reportedly made millions of unauthorized accounts as a means to meet target goals and quotas.

On Feb. 21, Wells Fargo agreed to a settlement of $3 billion with the Justice Department and SEC to resolve the claims related to the fake account scandal. The bank also paid another $1 billion in settlements to the CFPB, Office of the Comptroller of the Currency, the Los Angeles City Attorney’s office and numerous private class action settlements.

Wells Fargo is also on its third chief executive since the fake account scandal broke in 2016.

More such scandals could loom on the horizon. In September 2019, the CFPB denied a request from Bank of America to close a similar set of allegations against it, which date back to 2014. The case against Wells Fargo spurred regulators to look harder at financial institutions for reports of similar behavior.

——————————

PYMNTS STUDY: THE CROSS-BORDER MERCHANT FRICTION INDEX – JUNE 2020

The PYMNTS Cross-Border Merchant Friction Index analyzes the key friction points experienced by consumers browsing, shopping and paying for purchases on international eCommerce sites. PYMNTS examined the checkout processes of 266 B2B and B2C eCommerce sites across 12 industries and operating from locations across Europe and the United States to provide a comprehensive overview of their checkout offerings.

TRENDING RIGHT NOW