TD Bank will pay $122M to settle CFPB charges of overdraft abuse

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TD Bank has agreed to pay $97 million in customer restitution and a $25 million fine as part of a settlement with the Consumer Financial Protection Bureau of claims that the Cherry Hill, N.J., bank deceptively charged overdraft fees for certain ATM and one-time debit card transactions.

TD Bank, the $383 billion-asset U.S. arm of TD Bank Group in Toronto, deceptively marketed its Debit Card Advance service as “free” when in fact the bank charged customers $35 for each overdraft transaction, the CFPB said in a consent order filed Thursday. The bank also claimed the debit card came with a new consumer checking account, which the CFPB found was untrue, according to the order.

The consent order states that from 2014 to 2018, TD Bank did not obtain customers' affirmative consent, or “opt-in,” to its overdraft policy at branches and off-site events.

The CFPB said in the consent order that bank managers instructed employees to orally present Debit Card Advance as a free service “while downplaying the fees and disclosures associated with the service.” It said TD Bank marketed the product as a feature that comes with all new consumer checking accounts, “rather than as an option that new customers must opt in to.”

“In some instances, TD Bank engaged in abusive acts or practices by materially interfering with consumers’ ability to understand" Debit Card Advance’s terms and conditions, the CFPB said in a press release.

The bank said in a press release that it did not admit to any wrongdoing under the civil settlement.

Greg Braca, the president and CEO of TD Bank, said in its release that the bank had already voluntarily and proactively made changes to its disclosure and enrollment processes beginning in 2014.

"Although we disagree with the CFPB's conclusions, we have cooperated fully to resolve this matter," Braca said.

The settlement "largely addresses certain disclosure and enrollment processes," the bank's release said.

TD Bank, which operates 1,250 branches mostly in the Eastern U.S., will pay restitution to about 1.4 million consumers. The consent order also requires the bank to correct its Debit Card Advance enrollment practices, stop using pre-marked overdraft notices to obtain a consumer’s affirmative consent to enroll, and adopt policies and procedures to ensure that the bank complies with all applicable laws regarding reporting consumer information to credit bureaus.

The CFPB said TD Bank violated the Electronic Fund Transfer Act and Regulation E by charging consumers overdraft fees without first obtaining their consent. The bank engaged in deceptive and abusive acts or practices in violation of the Consumer Financial Protection Act and the Fair Credit Report Act and Regulation V.

Correction: An earlier version of this story mistakenly said that TD Bank agreed with one of the claims in the consent order. TD says that it did not admit to any wrongdoing under the civil settlement.

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Consumer banking Overdrafts Enforcement Enforcement actions Compliance UDAAP CFPB TD Bank