CFPB Fines Fifth Third Bank for Illegal Credit Card Practices
Yesterday, Fifth Third Bank became the 11th credit card issuer to be slapped with major fines by the Consumer Financial Protection Bureau for illegal practices in the marketing or administration of credit card add-on products and services.
Fifth Third Bank will have to pay back an estimated $3 million to nearly 24,500 consumers who purchased a “Debt Protection” credit card add-on product. From 2007 to 2013, the bank marketed and sold the Debt Protection product, which would allow cardholders to request the cancellation of credit card payments if they experienced certain hardships, such as job loss, disability and hospitalization.
The CFPB discovered the bank’s telemarketers deceptively marketed the credit card add-on product during calls. In some cases, the telemarketers did not tell some cardholders that by agreeing to receive information about the product, they were being enrolled and would be charged a fee. Some kits sent out from the bank contained incorrect descriptions of the product’s cost, benefits, exclusions, terms and conditions.
In addition to paying back the affected customers, the bank will have to pay a $500,000 penalty to the CFPB civil penalty fund.
Fifth Third Bank was also fined $18 million for discrimination in vehicle financing. The CFPB and the Department of Justice found the APR charged to Hispanic and African-American borrowers was higher than the amount charged to white borrowers. The bank will have to pay the $18 million to harmed customers.
“We are committed to promoting fair and equal access to credit in the auto finance marketplace,” said CFPB Director Richard Cordray. “Fifth Third’s move to a new pricing and compensation system represents a significant step toward protecting consumers from discrimination. We are also obtaining millions of dollars in relief today for consumers affected by deceptive marketing of credit add-on products.”