Fifth Third Bank Faces Suit For Allegedly Opening Unauthorized Accounts

CFPB Files Suit Against Fifth Third Bank, National Association for Allegedly Opening Unauthorized Accounts and Enrolling Consumers in Unauthorized Products and Services

Kehoe Law Firm, P.C. is making consumers aware that on March 9, 2020, the Consumer Financial Protection Bureau (“CFPB”) announced that it filed a lawsuit in United States District Court against Fifth Third Bank, National Association (“Fifth Third Bank” or “Fifth Third”). In its complaint, the CFPB alleges that for several years Fifth Third Bank, 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. Allegedly, Fifth Third Bank violated the Consumer Financial Protection Act’s prohibition against unfair and abusive acts or practices as well as the Truth in Lending Act and the Truth in Savings Act and their implementing regulations.

Allegedly, according to the CFPB, for years and continuing through at least 2016, Fifth Third Bank used a “cross-sell” strategy to increase the number of products and services it provided to existing customers; used an incentive-compensation program to reward selling new products; and conditioned employee-performance ratings and, in some instances, continued employment on meeting ambitious sales goals. The CFPB further alleges that, despite knowing since at least 2008 that employees were opening unauthorized consumer-financial accounts, Fifth Third Bank took insufficient steps to detect and stop the conduct and to identify and remediate harmed consumers.

According to the CFPB, reasonable sales goals and performance incentives are not inherently harmful, but when such programs are not carefully and properly implemented and monitored, as the CFPB alleges, they may create incentives for employees to engage in misconduct in order to meet goals or earn additional compensation.

The CFPB is seeking an injunction to stop Fifth Third Bank’s unlawful conduct, redress for affected consumers, and the imposition of a civil money penalty.

Bureau of Consumer Financial Protection v. Fifth Third Bank, National Association

According to the CFPB’s Complaint, filed on March 9, 2020 in United States District Court, Northern District of Illinois, Eastern Division, Fifth Third Bank, allegedly, in regards to deposit accounts:

. . . imposed aggressive sales goals for its employees to open new deposit accounts, and its incentive-compensation program rewarded employees for opening new deposit accounts funded with a specified minimum balance within a defined period.

From at least 2010 through at least 2016, Fifth Third opened deposit accounts for existing Fifth Third customers without the customers’ knowledge or consent.

Some of these unauthorized accounts were “funded” when a banker transferred funds to the unauthorized account from the same consumer’s authorized account without the consumer’s knowledge or consent. Often, once an unauthorized account was “funded,” such that it qualified under the sales-goal tracking or incentive program, the banker transferred the funds back to the consumer’s authorized account, again without the consumer’s knowledge or consent.

Opening deposit accounts without consumers’ knowledge or consent and moving consumers’ funds without their knowledge or consent exposed consumers to risks of harm, including that they would be unable to meet their financial obligations, would incur fees, or would experience negative effects on their consumer-reporting-agency information.

Fifth Third charged unjustified fees to many consumers who had deposit accounts opened without their knowledge or consent and whose funds were transferred from their existing accounts to their new, improperly opened accounts.

The CFPB’s complaint alleges in regards to credit cards that

Fifth Third imposed aggressive sales goals for its employees to sell credit cards to consumers, and its incentive-compensation program rewarded employees for selling new credit cards.

From at least 2008 through at least 2016, Fifth Third issued credit cards to existing customers without their knowledge or consent.

By 2009, at the latest, Fifth Third noticed a spike in unauthorized credit cards being issued to consumers.

Despite recognizing the increasing number of unauthorized credit cards, Fifth Third continued to emphasize sales and to maintain credit-card sales goals and incentive compensation.

Issuing credit cards without consumers’ knowledge or consent exposed consumers to risks of harm, including unjustified fees for the unauthorized credit cards and negative effects on their consumer-reporting-agency information. Fifth Third charged many of these consumers unjustified fees.

In regards to enrollment in online banking, the CFPB’s complaint alleges that

Fifth Third imposed aggressive sales goals for its employees to enroll consumers in its online-banking services, and its incentive-compensation program rewarded employees for enrolling consumers in those services.

From at least 2010 through at least 2016, Fifth Third enrolled consumers in online-banking services without their knowledge or consent.

Fifth Third’s enrollment of consumers in online-banking services without their knowledge or consent exposed consumers to the risk of harm, including increased risk of data theft, money theft, and improper personal-data use.

Regarding opening of early access, the CFPB’s complaint alleges that

[e]arly Access is a fee-based line of credit that allows Fifth Third’s deposit-account holders to withdraw funds from their deposit accounts before the funds have been deposited in the accounts. Fifth Third imposed aggressive sales goals for its employees to sell Early Access to consumers, and its incentive-compensation program rewarded employees for enrolling consumers in “fee-based products,” including Early Access.

Fifth Third opened Early Access lines of credit on consumers’ deposit accounts without their knowledge or consent. Fifth Third was aware of this by June 2010, when senior management was notified of an increase in the number of calls by employees to the internal whistleblower hotline regarding the unauthorized opening of Early Access lines of credit.

Fifth Third opened unauthorized Early Access lines of credit from at least 2010 through 2014, and Fifth Third retained unauthorized Early Access lines of credit even after it stopped offering new Early Access lines of credit.

Fifth Third’s opening and retention of these unauthorized lines of credit risked harm to consumers, including to their consumer-reporting-agency information.

Source: Consumer Financial Protection Bureau, Consumerfinance.gov

Kehoe Law Firm, P.C.