Fifth Third facing its own fake account fiasco

Bank discloses that CFPB plans enforcement action

In the last few years, Wells Fargo has been battered by regulators and lawsuits stemming from the fake account scandal that saw 5,000 Wells Fargo employees open two million fake accounts in order to receive sales bonuses.

But it appears that Wells Fargo isn’t the only bank with a fake account problem.

Fifth Third Bank revealed this week that it is facing an enforcement action from the Consumer Financial Protection Bureau over “alleged unauthorized account openings.”

The bank made the disclosure in its quarterly 10-K filing with the Securities and Exchange Commission.

In the filing, Fifth Third stated that the CFPB has notified the bank that the bureau intends to file an enforcement action over the alleged fake accounts, but the bank claims that it does not agree with the bureau’s claim and plans to fight back.

“Fifth Third believes that the facts do not warrant an enforcement proceeding and intends to defend itself vigorously if such an action should be filed,” the bank said in its SEC filing.

A Fifth Third spokesperson added that the bank fully cooperates with any regulatory and government inquiries.

Wells Fargo’s fake account troubles also started with a CFPB enforcement action. Back in 2016, the CFPB, the Office of the Comptroller of the Currency and the city and county of Los Angeles fined the bank $185 million for the bank’s employees opening up fake accounts in customers’ names.

But that was just the beginning.

From there, the bank later inked a $142 million settlement with the affected customers, and a $480 million settlement with a group of shareholders who accused the bank of making “certain misstatements and omissions” in the company’s disclosures about its sales practices.

In the wake of the scheme first being uncovered, the bank’s CEO and chairman, John Stumpf, promptly resigned from his positions. From there, the bank took additional action to address the issues that led to the fines, including revoking 2016 bonuses for its top executives, firing four senior managers, ousting another two executives, and splitting the role of chairman and CEO. 

Fifth Third provided no indication as to the size of the alleged issue, nor the fine it would be facing should the CFPB take action.

However, the bank is much smaller than Wells Fargo, so it’s possible that its fines and other enforcement actions could be much smaller than Wells Fargo. Fifth Third is based in Ohio and has branches in Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Georgia and North Carolina, whereas Wells Fargo is nationwide.

The story was first reported by Bloomberg Law.

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