Fifth Third Bank was fined $15 million by the Consumer Financial Protection Bureau today for allegedly opening fake accounts in its customers’ names.

The Cincinnati-based bank was using a cross-selling strategy to boost the number of products and services it was selling to customers and opening unauthorized accounts to meet sales quotas, according to a CFPB release issued today.

“The $15M settlement resolves a prior lawsuit that was in the discovery phase, according to Fifth Third’s 10-Q and 10-K filings earlier this year. Removing this uncertainty is a good thing in the big picture,” Christopher Marinac, director of research at financial advisory firm Janney Montgomery Scott, told Bank Automation News.

The fine, accompanied by a $5 million auto finance-related fine, is expected to have minimal impact on the $214 billion bank’s earnings, Marinac said.

“We forecast $8.5 billion in 2024 revenue at Fifth Third Bancorp with $3.6 billion in pre-tax earnings. The combined $20M fines are equal to 0.25% (one quarter of one percent) of revenues and just over 0.50% (one-half of one percent) of pre-tax earnings.”

Fifth Third has already taken action to address the existing lawsuit, “including identifying issues and taking the initiative to set things right,” Susan Zaunbrecher, chief legal officer of Fifth Third, said in a release from Fifth Third today.

Lesson not learned

In 2016, Wells Fargo was fined $100 million for opening unauthorized deposit and credit card accounts to meet sales targets and compensation incentives, according to a September 2016 CFPB release, which stated that bank employees had opened more than 2 million unauthorized consumer accounts.

“Because of the severity of these violations, Wells Fargo is paying the largest penalty the CFPB has ever imposed,” Richard Cordray, the CFPB director at the time, said of the action against Wells Fargo. “Today’s action should serve notice to the entire industry that financial incentive programs, if not monitored carefully, carry serious risks that can have serious legal consequences.”

“The Consumer Financial Protection Bureau’s orders require Fifth Third to pay tens of millions in refunds and penalties,” CFPB Director Rohit Chopra said in a LinkedIn post today. “We are also banning Fifth Third from setting sales quotas that spawn fraud.”

Fifth Third will report its third-quarter earnings on July 19, according to the bank’s investor relations site.

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