U.S. consumer watchdog charges Fifth Third Bank on opening phony accounts

U.S. consumer watchdog charges Fifth Third Bank on opening phony accounts
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WASHINGTON (Reuters) – The U.S. Consumer Financial Protection Bureau (CFPB) said on Monday it charged Fifth Third Bank, National Association, with creating fake client deposit and credit-card accounts and transferring clients’ funds to those accounts without consent, citing an abuse of fair lending and savings laws.

“Despite 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,” the CFPB said.

It also alleged that the program “created incentives for employees to engage in misconduct in order to meet goals or earn additional compensation” at least until 2016.

Calling the CFPB’s suit “unnecessary and unwarranted,” the Cincinnati-based lender acknowledged “a limited and historical event” but said it was addressed and involved a small number of accounts.

“Our controls are designed to prevent and detect unauthorized account openings,” Susan Zaunbrecher, the bank’s chief legal officer, said in a statement.

The CFPB’s charges follow the pursuit of U.S. financial regulators to stamp out fair lending and savings abuses by another national lender, Wells Fargo & Co (WFC.N). Wells Fargo agreed last month to pay $3 billion to resolve criminal and civil probes of fraudulent sales practices and admitted to pressuring employees in a fake-accounts scandal.

Source: Reuters

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