Fifth Third Bank is one of three defendants that has agreed to pay a $50 million settlement to resolve allegations of illegal recording of telemarketing calls in California, according to a motion for preliminary approval that was filed March 12 in federal court in Chicago.
It would be the largest settlement by total dollar amount in a case brought under the California Invasion of Privacy Act, and it would be nearly double the $28 million Wells Fargo paid last summer to settle a similar lawsuit, the filing said.
Previously, the largest settlement under California’s privacy law was $18 million, the filing said.
The lawsuit in question was filed in December of 2016 on behalf of merchants in California that received sales appointment setting calls from two independent sales organizations — International Payment Services and Ironwood Financial. The lawsuit alleges that Fifth Third and two payments processing companies were in a “principal-agent relationship” with IPS and Ironwood and, through that relationship, violated California’s privacy laws “by recording telemarketing calls without any warning that the recording was occurring,” according to the filing.
The alleged illegal recordings were said to have occurred from May 8, 2014, to July 29, 2016, during which an estimated 313,215 individuals received nearly 1.2 million recorded phone calls, the filing said.
On Tuesday, a Fifth Third spokesperson declined to comment on the settlement, which requires an OK from the court before it’s official. But previously filed legal documents in the case outline the relationship between Fifth Third and the sales organizations. None of the plaintiffs “could recall any mention” of Fifth Third or the two payment processing companies during any calls or subsequent in-person meetings, and the sales vendors acted outside the scope of work by illegally recording calls, according to earlier filings by Fifth Third and the payments processors in defending themselves.
Fifth Third Bank is the banking subsidiary of the $211 billion-asset Fifth Third Bancorp in Cincinnati. As a sponsor bank for the two payment processing companies, Vantiv and National Processing Company, it transferred funds to merchants and ACH payments to processors.
National Processing Company was a subsidiary of Vantiv, which
Fifth Third, the other defendants and the plaintiffs have met on numerous occasions to try to reach a settlement, including a full day of mediation in February 2021, according to the filing. The settlement with Wells Fargo was reached over the summer.
There are several steps remaining before any payments are made. The court must certify a settlement class and preliminarily approve the settlement before then signing off on the proposed plan for notifying the class and then setting a date for a final approval hearing, the filing said.
Under the settlement, each class member of the lawsuit is in line to “receive hundreds of dollars each, if not more” after attorneys’ fees and other costs, the filing said. Each class member would be eligible for a cash payment for each phone call that is deemed covered under the lawsuit.
