Fifth Third Bank has agreed to pay millions to settle allegations of improper insurance practices related to auto loans that led to more expensive monthly payments and vehicle repossessions. The Consumer Financial Protection Bureau revealed that the Ohio-based bank improperly applied around 37,000 insurance policies between 2011 and 2019, resulting in a $5 million penalty and ordered redress for affected customers. CFPB Director Rohit Chopra emphasized that over 1,000 families lost their cars to repossession due to excessive charges on auto loan bills.
The bank faced accusations of illegally adding duplicative car insurance policies to auto loan customers, significantly increasing their monthly payments. Despite the bank’s claim that the insurance practices were voluntarily ceased in 2019, the CFPB uncovered the ongoing impact on customers, leading to potential consequences for senior executives and the board of directors. Fifth Third Bank’s chief legal officer, Susan Zaunbrecher, acknowledged the past issues and stated that corrective actions had been taken to rectify these problems.
In a separate issue, Fifth Third Bank previously settled allegations of improperly opening accounts and agreed to a $15 million settlement in 2020. The force-placed insurance program utilized by the bank was intended to protect the loan collateral but ultimately resulted in unnecessary charges and repossession threats for customers. The CFPB highlighted the unlawful nature of the charges, which led to delinquency for some customers, causing over 1,000 vehicle repossessions before the program was terminated in 2019.
