Federal financial agency charges Fifth Third Bank with opening unauthorized accounts and signing consumers up for unapproved products and services

Photo: Ed! (Photography)

The Consumer Financial Protection Bureau filed a lawsuit in Illinois Monday against Fifth Third Bank, one of the largest banks in the Midwest.

The CFPB alleges that 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.

The lawsuit claims that Fifth Third violated the Consumer Financial Protection Act’s prohibition against unfair and abusive acts or practices. It also charges the bank with violating the Truth in Lending Act and the Truth in Savings Act.

The CFPB alleges that for years and continuing through at least 2016, Fifth Third used:

• A “cross-sell” strategy to increase the number of products and services it provided to existing customers.
• An incentive-compensation program to reward selling new products.
• Conditioned employee-performance ratings and, in some cases, continued employment on meeting ambitious sales goals.

The CFPB also alleges that, despite knowing since at least 2008 that employees were opening unauthorized accounts, Fifth Third didn’t take strong steps to detect and stop the practice and to identify and remediate harmed consumers.

Reasonable sales goals and performance incentives aren’t harmful, the  CFPB said in a statement. But when the programs aren’t properly carried out and monitored, as the CFPB alleges in its lawsuit, they can create incentives for employees to engage in misconduct to meet goals or earn additional compensation.

Earlier this month, in relation to similar charges, Wells Fargo agreed to pay $3 billion to resolve civil and criminal charges related to its practice between 2002 and 2016 of pressuring employees to meet unrealistic sales goals that led to millions of accounts being created under false pretenses or without consent.