In a settlement with the Consumer Financial Protection Bureau, TD Bank will pay a $25 million fine and $97 million in restitution to roughly 1.42 million customers affected by the bank’s illegal overdraft fees.
The $383 billion bank charged consumers overdraft fees for ATM and one-time debit card transactions without their permission, according to a CFPB press release. The bureau also found that the bank claimed DCA, or debit card advance, was a free service that comes with a new consumer checking account. In truth, DCA is an optional service that does not come with the new consumer accounts, and TD charges customers $35 for each overdraft transaction paid through DCA.
In some instances, according to the release, “TD Bank engaged in abusive acts or practices by materially interfering with consumers’ ability to understand DCA’s terms and conditions.” In some cases, the Cherry Hill, N.J., bank required new customers to sign its overdraft notice with the “enrolled” option pre-checked without mentioning the DCA service to the customer at all, and enrolled new customers in DCA without oral confirmation.
The bank violated the Fair Credit Reporting Act and Regulation V by failing to establish and implement reasonable written policies and procedures about the accuracy and integrity of consumer-account information it furnished to two nationwide specialty consumer reporting agencies. The bank also failed to conduct timely investigations of indirect consumer disputes about its furnishing to one of those special agencies, the CFPB said.
The consent order, in addition to requiring the bank to pay $122 million in fees and restitution, requires TD Bank to correct its DCA enrollment practices, stop using pre-marked overdraft notices to secure unknowing consent, and to adopt policies and procedures designed to ensure that TD Bank’s furnishing practices regarding national specialty consumer reporting agencies comply with all applicable Federal consumer financial laws.
In a statement, TD Bank President and CEO Greg Braca said the bank disagrees with the bureau’s conclusions, but agrees to cooperate in order to move forward and resolve the matter.
“TD Bank did not admit to any wrongdoing under the civil settlement. The bank will continue to offer the DCA optional overdraft service, which is valued by customers and helps them avoid declined transactions due to insufficient funds,” a press release by TD Bank said.