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DOJ Investigating Fifth Third Bank’s Auto Lending Practices

May 15, 2014

By Brittany-Marie Swanson

Photo via Flickr.
Photo via Flickr.

CINCINNATI — Fifth Third Bank revealed in a regulatory filing this month that it is under investigation by the Department of Justice (DOJ) to determine whether it engaged in discriminatory practices related to auto lending.

According to the filing, the bank is cooperating with the investigation of its indirect automobile loan portfolio. “Any claim resulting from this investigation could include direct and indirect damages and civil money penalties,” the filing read, in part.

Last summer, the finance source notified dealers in a letter obtained by F&I and Showroom that it was monitoring how dealers mark up interest rates on retail installment sales contracts. The notice stated that Fifth Third Bank regularly reviews auto loans received from dealers to “ensure that dealer reserve (markup) is not applied disproportionately based on an applicant’s race.”

The notice, however, was distributed a few months after the Consumer Financial Protection Bureau (CFPB) warned finance sources that they would be held responsible for unlawful, discriminatory pricing on the part of their dealers.

Both the CFPB and the DOJ have been examining whether a dealer’s ability to mark up the interest rate on finance contracts has a disproportionate impact on women and minorities.

In addition to the investigation of its auto loan portfolio, Fifth Third is also facing a civil investigation by the DOJ and the Office of the Inspector General for the Department of Housing and Urban Development regarding compliance with requirements related to certain Federal Housing Agency-insured loans originated by its affiliates.

Fifth Third Bank declined to comment on the DOJ’s investigation. 

Comments

  1. 1. Lucas Ochmann [ May 15, 2014 @ 03:47PM ]

    Banks need to understand the entire customer application for credit rather than using a finance matrix to approve a customer. Why is it that when we apply for a loan the bank issues a buy rate. If we need to fight for the deal and call a buyer then rates are sometimes discounted to complete the contract. How much are consumers overpaying in finance because of computer approvals? Each finance institution needs to have a live person to review applications for customers to save the customer money in finance rates. This forces dealers to provide misleading information based on credit score to truick the computer in authorizing a lower rate. I really don't like the fact that interviews from the finance institution are conducted after contracts have been signed. I have seen too many deals rewind because the interview did not match the information provided on the application.

  2. 2. ManInCharlotte [ May 16, 2014 @ 06:44AM ]

    So, what you are saying is, you comit bank fraud by tricking they application process and then you want to complain that your deal unwinds because you lied to the bank? YOU are the problem!

  3. 3. David Larrieu [ May 16, 2014 @ 08:32AM ]

    Lucas, if you are having so many deals unwind then maybe you should try to do the deals the right way instead of being so shady. I have got customers done that only make $600 per month because the banks know that I don't lie to them. They even called me and asked if that was his real income and I said yes he only makes $600 per month. If you put them on the right car then you wont have a problem.
    This is something that you need to figure out quick before you get the dealership shut down and you land your self behind bars.

  4. 4. FinanceGuyinMD [ May 17, 2014 @ 05:45AM ]

    Wow...Lucas...Wow. Good luck with that.

  5. 5. Mike [ May 17, 2014 @ 08:00AM ]

    Dealers are not forced into doing anything misleading, unlawful, unethical, immoral, or misleading the bank in any way shape or form. This is called BANK FRAUD and some day soon you will most likely be hearing from the Federal or State Government about how you tried to trick the bank into making a loan for a customer that did not qualify! You are the reason we have a bad name so please learn how to do it the right way!!!

  6. 6. Hendrix Steele [ May 17, 2014 @ 12:50PM ]

    Wow. Just, wow. Who commits bank fraud, acknowledges it on a public forum, complains about dals being kicked over said bank fraud, and puts his full name in the comment section. No wonder there's been so much nes about the Feds coming down on dealers/lenders with people like that in representing us...

  7. 7. Hendrix Steele [ May 17, 2014 @ 12:50PM ]

    Wow. Just, wow. Who commits bank fraud, acknowledges it on a public forum, complains about dals being kicked over said bank fraud, and puts his full name in the comment section. No wonder there's been so much nes about the Feds coming down on dealers/lenders with people like that in representing us...

  8. 8. Bill Bowren [ May 19, 2014 @ 01:50PM ]

    I can't believe Lucas. I have worked in the finance office for 15 years and have never "tricked" the computer to give better rates. My reputation means to much to me to ever falsify a credit application.

  9. 9. CreditUnionGal [ May 27, 2014 @ 01:05PM ]

    Lucas, I hope that isn't your real name. You have no business spinning paper for any dealer. I sat behind an F&I desk for several years before going over to the lending side, and I have to say, I have never come across anyone so stupidly dishonest in my life. You are exactly the reason why lenders conduct interviews after a contract is signed at the dealership and received in their office. BTW, lenders catch on quick which dealers to constantly scrutinize and which ones shoot straight. I'm sure your lenders have you under watch by now, which is why so many of your deals are getting kicked back.

  10. 10. Bubba B [ June 11, 2014 @ 08:57AM ]

    On an unrelated note, I heard that Fifth Third is considering changing their name to Eighty Seven Thousand Six Hundred and Forty-Eighth, Twelve Thousand Two Hundred and Ninety-Fourth Bank.

 

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