Taking actions on accounts without consumers’ knowledge or consent – including opening deposit and credit-card accounts in their names, transferring funds from their existing accounts to improperly opened accounts, and enrolling them in unauthorized online-banking services – are among the charges outlined Monday against a Cincinnati-based bank by the federal consumer financial protection agency.
In filings with the federal district court in the Northern District of Illinois, the Consumer Financial Protection Bureau (CFPB) alleged that Fifth Third Bank for several years engaged in the practices undertaken without seeking their customers’ consent. The bureau also charged that the 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.
The bureau said it is seeking an injunction to “stop Fifth Third’s unlawful conduct, redress for affected consumers, and the imposition of a civil money penalty.”
The charges against Fifth Third, one of the largest banks in country (15th in assets, with $167.8 billion, at year-end 2019), coincides with the appointment reported last week of Leonard Chanin as deputy director of the consumer protection agency. He previously served as deputy general counsel and senior vice president at Fifth Third, where his boss was current FDIC Chairman Jelena McWilliams, who then served as general counsel of the bank.
Chanin followed McWilliams to the FDIC in 2019, serving as her deputy. He also has previous experience at the bureau: he served as CFPB’s assistant director of the office of regulation, where he was responsible for implementing federal consumer financial services laws. Before that, he served for two decades in the Federal Reserve’s division of consumer and community affairs, most recently as the division’s deputy director, providing legal opinions and policy recommendations to the board and other activities.
Chanin, who is reportedly replacing Brian Johnson as deputy director, will split his time between the bureau and the FDIC.
Regarding the charges against Fifth Third, CFPB said specifically that the bank allegedly used a variety of strategies to maximize sales since at least 2016. Those strategies included: a “cross-sell” strategy to increase the number of products and services the bank provided to existing customers; an incentive-compensation program to reward employees selling new products; and conditioned employee-performance ratings – including, in some instances, continued employment – on meeting ambitious sales goals.
CFPB also charged that despite the bank’s 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.
“Reasonable sales goals and performance incentives are not inherently harmful,” the bureau said in its release. “But when such programs are not carefully and properly implemented and monitored, as the Bureau alleges here, they may create incentives for employees to engage in misconduct in order to meet goals or earn additional compensation.”