Fifth Third Bank fined for discriminating against minorities seeking auto loans

New cars sit on display at a car dealership. (Photo by David Paul Morris/Bloomberg)

Fifth Third Bank agreed to pay $21 million to consumers to settle allegations that it discriminated against minorities seeking auto loans and used deceptive marketing techniques to sell credit card protection products.

In a joint enforcement action from the Consumer Financial Protection Bureau and the Department of Justice, the regional bank was asked to pay $18 million to consumers for allowing dealers to charge higher interest rates on auto loans for African-American and Hispanic borrowers, regardless of their creditworthiness.

Because of the illegal pricing method, thousands of minority borrowers were charged over $200 more for their auto loans between January 2010 and September 2015. As a part of the action, Fifth Third Bank, which is headquartered in Cincinnati, will face new limits on how much dealers can mark up interest rates for consumers. In a statement, Fifth Third Bank said it already limits how much dealers can charge, and that it will be lowering those caps as part of the enforcement action.

Fifth Third will also need to pay $3 million in relief for credit card consumers who were deceptively sold “debt protection products,” along with a $500,000 penalty.  Consumers were not told that agreeing to learn more about the products meant that they would automatically be enrolled in the services and charged a fee.