Court dismisses CFPB claims against TCF

The United States District Court for the District of Minnesota dismissed claims of Reg E violations the Consumer Financial Protection Bureau made against TCF National Bank. It partially upheld, however, the bureau’s claim of UDAAP violations.

The United States District Court for the District of Minnesota dismissed some of the claims the Consumer Financial Protection Bureau made against TCF National Bank.

The CFPB filed a lawsuit against the Minnesota bank in January over its implementation of Regulation E’s ‘opt-in’ requirements in its overdraft protection enrollment practices. It also characterized the bank’s approach to notifying customers as abusive and deceptive in violation of the Consumer Financial Protection Act.

Although TCF had provided the required paper notices, the CFPB claimed that because “consumers rarely read written disclosures,” TCF’s alleged failure to adequately verbally explain them constituted a Reg E violation.

In response to the suit, TCF filed a motion to dismiss the CFPB’s claims. The Minnesota Bankers Association filed an amicus brief on behalf of TCF in its dismissal motion.

“In our amicus brief, we urged the Court to reject the CFPB’s new, unwritten requirement and to enforce Regulation E as it is written,” said MBA President Joe Witt in notice sent to assocation members. “Otherwise, every bank could be subject to this kind of Regulation E lawsuit. And, by extension, every bank could be subject to this kind of lawsuit under Regulation Z, RESPA and all the other consumer protection laws that rely upon written disclosures.”

The Court dismissed the claim of Reg E violations; however, it did partially uphold the CFPB’s claim of abusive and deceptive actions against TCF.

The CFPB’s complaint alleged UDAAP violations back to 2010, the opt-in rule’s original effective date. TCF Bank argued that those claims should be limited because of the statute of limitations, because the CFPB was not an authorized agency in 2010 and because the “abusive” standard was not part of the UDAAP rules in 2010.

The Court dismissed the CFPB’s UDAAP claims for periods prior to July 21, 2011. The Court denied TCF’s motion to dismiss CFPA claims for periods after July 21, 2011.

In a motion to dismiss, the court can dismiss a claim if the moving party can prove that it should win based solely on the law. There must be no facts that could possibly be introduced that could change that outcome.

This is the scenario in TCF’s alleged Reg E violations in the CFPB suit. The Court determined TCF did everything the law requires, so it granted the motion to dismiss those claims.

“The UDAAP claims are different,” Witt wrote. “They are heavily fact-specific as to what TCF’s bankers said and did when interacting with customers. These types of fact-specific claims are not good candidates for a motion to dismiss, and the Court decided not to dismiss those claims at this stage of the lawsuit.”