Agency sues Fifth Third Bank

Regulator says sales strategy led to opening of bogus accounts.

For years, Fifth Third Bank, a large regional bank based in Ohio, opened unauthorized accounts in customers’ names as part of an aggressive sales strategy that foisted credit cards, online banking services and other products on people without their knowledge, according to a lawsuit filed Monday by one of the bank’s federal regulators.

The bank “set goals that thousands of its employees could not achieve” and penalized those who fell short, the Consumer Financial Protection Bureau said in a complaint in federal court in Chicago. The misconduct stretched back to at least 2008, and the bank failed to sufficiently respond to internal warning signs, the consumer bureau said.

The charges against the bank echoed those that have bedeviled Wells Fargo, which has been engulfed in turmoil since it admitted in 2016 that it created what may have been millions of sham accounts to increase its sales.

Fifth Third said it would fight the consumer bureau’s lawsuit, which it called “unwarranted.” It did, however, acknowledge that its own reviews had found 1,100 accounts that were opened without authorization.

A person familiar with the bank’s operations said it had begun investigating potential unauthorized transactions in 2010, after its internal compliance systems raised alarms. The bank reported findings to its regulators and notified the affected customers, the person said.

“These accounts involved less than $30,000 in improper customer charges that were ultimately waived or reimbursed to customers years ago,” the bank said in a statement. “While even a single unauthorized account is one too many, we took appropriate and decisive action to address each situation.” In a regulatory filing last week, the bank warned investors it expected the consumer bureau to file an enforcement action against it.

The bureau did not say in its legal filing how many customers were harmed by the bank’s acts. Ambitious sales goals are “not inherently harmful,” the consumer bureau said in its complaint, but without sufficient supervision, they can create incentives for employees to act unethically to increase their compensation or protect their jobs. Fifth Third “failed to take adequate steps to detect and stop” such misbehavior, the bureau said.

Fifth Third, one of the Midwest’s largest consumer banks, operates 1,100 branches in 10 states (including 33 in Georgia) and holds around $410 billion in customer assets.