Duped Fifth Third credit customers could get refund

Cincinnati-based Fifth Third has been ordered by the consumer watchdog agency to pay $3 million to about 24,500 credit card customers for misleading practices the bank has already ceased.

Generally, credit card consumers enrolled in the debt protection product for 12 months or less will receive a refund of all debt protection fees paid between Jan. 1, 2007 and Nov. 11, 2013, said Sam Gilford, spokesman for the financial protection bureau, in an email.

Those enrolled in the product for more than a year will receive a refund of 12 months of debt protection fees paid between Jan. 2007 and Nov. 2013 based on the average monthly fee paid by the customer over the whole course of their membership, Gilford said. These people will also receive refunds of all over-limit fees, late fees and estimated finance charges including any penalty interest charges, he said.

“Consumers who are eligible for a refund will not have to do anything. If a consumer is eligible for a refund as a result of this action, Fifth Third will give refunds to affected consumers directly,” he said.

From 2007 through early 2013, bank telemarketers sold customers in phone calls and online a debt protection credit card add-on product. It promised to allow enrolled cardholders to request cancellation of credit card payments if they experienced hardships such as job loss, disability and hospitalization, according to the bureau. However, not all cardholders that agreed to receive information about the product were told they were enrolled in the program and would be charged a fee, according to the bureau, which announced the settlement deal on Sept. 28.

In a separate issue also announced Sept. 28, Fifth Third settled allegations from the financial bureau and U.S. Department of Justice that auto loans purchased by the bank charged minority customers more than white borrowers.

That second settlement requires Fifth Third — Ohio’s second largest bank by deposits held — to pay $18 million to harmed customers.

Before any money is put back in the wallets of affected black and Hispanic customers, Fifth Third will pay to hire a settlement administrator to distribute funds to victims, Gilford said. Then the administrator will contact consumers, distribute the funds, and ensure those borrowers who were harmed receive compensation, he said.

“The bureau will provide contact information for the settlement administrator once that person is chosen to address questions that consumers may have about potential payments,” Gilford added.

Most recently, Fifth Third also revealed on Oct. 5 in regulatory filings that it reached a third settlement with the Department of Justice and U.S. Department of Housing and Urban Development regarding mortgage insurance.

Fifth Third voluntarily disclosed to the government that approximately 1,400 mortgages it had certified as eligible for Federal Housing Administration insurance which were later found to be ineligible for the program, according to the bank filing.

The regional bank has agreed to pay $85 million to the government and the case will be dismissed. Additionally, the filing made with the U.S. Securities and Exchange Commission spells out that Fifth Third has “reformed its business practices and terminated the employment of responsible employees.”

But the settlement with HUD doesn’t affect consumers, according to a Fifth Third spokesman, and likely won’t result in a payout to home loan borrowers.

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