Ripped Off by Fifth Third Bank?

FIFTH THIRD BANK TO PAY $18 million to African-American and Hispanic auto borrowers for lending discrimination and $3 million to credit card customers for deceptive marketing practices.
Consumer Financial Protection Bureau “CFPB” and Department of Justice (DOJ) entered into an agreement with Fifth Third Bank requiring that the bank change its pricing and compensation structure in order to reduce the risks of discrimination, and to pay $18 million to harmed African-American and Hispanic borrowers. The CFPB’s action against Fifth Third’s deceptive marketing of credit card add-on products requires the bank to provide an estimated $3 million in relief to eligible harmed consumers and pay a $500,000 penalty.
It appears that Fifth Third may have let their employees or contract auto dealers run amuck because CFPB Director Richard Cordray said “Fifth Third’s move to a new pricing and compensation system represents a significant step toward protecting consumers from discrimination.”
Auto-Lending Enforcement Action
As an indirect auto lender, Fifth Third sets a risk-based interest rate, or “buy rate,” that it conveys to auto dealers. The bank then allows auto dealers to charge a higher interest rate when they finalize the deal with the consumer. This is typically called “dealer markup.” Markups can generate compensation for dealers while giving them the discretion to charge consumers different rates regardless of consumer creditworthiness. Over the time period under review, Fifth Third permitted dealers to mark up consumers’ interest rates as much as 2.5 percent.

• Resulted in African-American and Hispanic borrowers paying higher dealer markups without regard to the creditworthiness of the borrowers.
• Injured thousands of minority borrowers by charging $200 more for auto loans.

Under the CFPB order, Fifth Third must:

• Substantially reduce or eliminate entirely dealer discretion.r.
• Pay $18 million in damages for consumer harm.
• Pay to hire a settlement administrator to distribute funds to victims.

CFPB’s consent order in the auto lending matter
Credit Card Enforcement Action
The CFPB reached an an agreement with Fifth Third for deceptive acts or practices in the marketing and sales of its “Debt Protection” credit card add-on product. The telemarketers promised to allow enrolled cardholders to request the cancellation of credit card payments if they experienced certain hardships such as job loss, disability, and hospitalization. The Bureau found that Fifth Third’s telemarketers deceptively marketed the add-on product during call including: misrepresenting costs and fees for coverage; misrepresenting or omitting information about eligibility for coverage; and illegal practices in the enrollment process.
This has taken quite a while to process because in September 2012, Fifth Third ceased telemarketing the product and ceased all other enrollments in February 2013.
The CFPB’s order requires that Fifth Third provide $3 million in relief to roughly 24,500 customers, cease engaging in illegal practices, and pay a $500,000 penalty to the CFPB civil penalty fund.
The CFPB’s consent order in the credit card add-on matter.

 

For auto loan or credit card questions or to submit a complaint, consumers can contact the CFPB at (855) 411-2372 or visit consumerfinance.gov.
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