Security & Fraud

Fifth Third Bank Sued By CFPB Over Fake Accounts

The Consumer Financial Protection Bureau (CFPB) filed a lawsuit against Cincinnati-based Fifth Third Bancorp alleging that employees opened accounts for customers without their consent in an effort to reach sales targets, according to reports on Tuesday (March 10).

The CFPB filed a complaint with the U.S. District Court for the Northern District of Illinois accusing Fifth Third of being fully aware that employees were opening accounts for customers without their knowledge since 2008.

“For several years Fifth Third, without consumers’ knowledge or consent, opened deposit and credit card accounts in consumers’ names; transferred funds from consumers’ existing accounts to new, improperly opened accounts; enrolled consumers in unauthorized online-banking services; and activated unauthorized lines of credit on consumers’ accounts,” according to a CFPB press release.

Fifth Third called the allegations “unnecessary and unwarranted,” according to the Wall Street Journal (WSJ). “These accounts involved less than $30,000 in improper customer charges that were ultimately waived or reimbursed to customers years ago,” Fifth Third said in a statement to the WSJ. “While even a single unauthorized account is one too many, we took appropriate and decisive action to address each situation.”

The CFPB alleged that the bank set high sales targets and incentivized employees for meeting them. At times, employees were told they could be fired for missing their goals.

“Fifth Third’s compensation and employee incentive structure does not reward retail employees for opening unauthorized accounts, nor does it give them sales quotas or product-specific targets,” the bank said. “Our controls are designed to prevent and detect unauthorized account openings.”

The consumer agency further alleges that, 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 bank is accused of eight counts of breaching federal consumer protection and banking laws. It is also accused of violating the Dodd-Frank Wall Street Reform, created in the aftermath of the 2008 financial crisis, and the Consumer Protection Act of 2010, according to The Hill.

On Feb. 21, Wells Fargo agreed to a $3 billion settlement with the Justice Department and SEC to resolve the claims related to the bank’s 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.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.