• Finance & Banking
  • Feds allege Wells Fargo-like practices by Fifth Third

    The Cincinnati-based bank, now a major player in Chicago since its 2019 purchase of MB Financial, mounts a spirited defense and says it wants its day in court.

    Bloomberg

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    Fifth Third Bank ran a system of sales goals and incentive compensation that prompted employees to open accounts in customers’ names without their knowledge or consent and failed to act appropriately when it learned of the issues with its staff, according to a lawsuit filed in federal court in Chicago on Monday by the U.S. Consumer Financial Protection Bureau.

    79彩票注册网址The complaint carried echoes of the 2016 scandal that tarred San Francisco-based Wells Fargo and resulted in the ouster of its chief executive and continues to dog the nation’s fourth-largest bank to this day.

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    79彩票注册网址Cincinnati-based Fifth Third, now one of the bigger banks in Chicago thanks to its is fighting back and vowing to go to trial. “Fifth Third Bank respects and values the important role that the CFPB plays in protecting consumers but believes that the civil suit filed today is unnecessary and unwarranted,” said Susan Zaunbrecher, chief legal officer, in a press release. “The bank will defend itself vigorously and is confident in the outcome.”

    Given the Wells Fargo has paid, both in dollars and, more importantly, in its reputation, Fifth Third’s response is understandable. Ordinarily, banks find a way to settle cases like these. But a settlement, even with the customary language not admitting or denying the allegations, can easily be perceived in the public mind as an effective confession.

    The CFPB and Fifth Third clearly have been wrangling about how to handle the infractions that were uncovered (Fifth Third said it discovered the problems itself) for years.

    79彩票注册网址The lawsuit addresses the time period “from at least 2010 through at least 2016.”

    79彩票注册网址“By 2010, at the latest, Fifth Third was aware that employees were opening products and services in consumers’ names without those consumers’ knowledge or consent in order to achieve sales goals or obtain incentive rewards,” according to the complaint. “Despite Fifth Third’s knowledge of unauthorized consumer-financial products and services, Fifth Third failed to take adequate steps to detect and stop these acts or practices and to identify, notify and remediate harmed consumers.”

    The products that Fifth Third employees improperly “sold” to these consumers included deposit accounts, credit cards, online-banking enrollment and “early access,” a line of credit that allows deposit holders to withdraw money from their accounts before the deposits are made, for a fee, the lawsuit said.

    79彩票注册网址The CFPB is asking for a court order to stop the bank from continuing those practices, notify any affected consumers who haven’t yet been informed they were harmed, reverse any negative credit bureau reporting that arose from the fraudulent accounts, and pay damages and civil fines.

    79彩票注册网址In its release, the bank said it uncovered fewer than 1,100 accounts that fell into the categories the CFPB identified between 2010 and 2016 and “the CFPB has not informed us of any unauthorized accounts beyond” these. “These accounts involved less than $30,000 in improper customer charges that were ultimately waived or reimbursed to customers years ago,” the bank said. “While even a single unauthorized account is one too many, we took appropriate and decisive action to address each situation.”

    79彩票注册网址Added Zaunbrecher in the release, “When a federal court examines the evidence, we believe it will agree with Fifth Third that this is a limited and historical event. The bank will press for an early trial.”

    79彩票注册网址Fifth Third said that it “realigned” its incentive programs “even before” the CFPB’s July 2011 establishment to focus on “account quality rather than quantity.”

    79彩票注册网址It said it doesn’t impose quotas or “product-specific” sales targets.

    79彩票注册网址The incentives it has “have always been modest,” the bank said. On average, it pays workers 33 cents for opening a new savings account and $1.67 for a new checking account. About 90 percent of retail workers’ compensation is salary, it said. Since 2018, it said, it eliminated account openings entirely as an incentive factor and focuses instead on customer satisfaction and “revenue metrics.”

    Fifth Third entered the Chicago market in the late 1990s but largely spun its wheels until last year’s $5 billion takeover of MB Financial. Chicago now is the single most important market to the bank in terms of deposits and loans, supplanting Fifth Third’s headquarters city of Cincinnati, where it dominates. In the much larger Chicago market, Fifth Third now is the sixth largest bank by deposits.

    The bureau's name has been corrected.

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