Settlement Result Of Investigation Into Overdraft Charges
August 26, 2020
TD Bank, while assuming no wrongdoing, has settled with the Consumer Financial Protection Bureau over issues with its optional overdraft service: Debit Card Advance (DCA). The bank will pay an estimated $97 million in restitution to about 1.42 million consumers and pay a civil money penalty of $25 million.
The CFPB found that TD Bank’s overdraft enrollment practices violated the Electronic Fund Transfer Act and Regulation E by charging consumers overdraft fees for ATM and one-time debit card transactions without obtaining their affirmative consent, and that TD Bank engaged in deceptive and abusive acts or practices in violation of the Consumer Financial Protection Act of 2010. The CFPB also found that TD Bank engaged in practices prohibited by the Fair Credit Reporting Act and its implementing Regulation V.
"At TD, we put our customers first and our business is built on a foundation of ethics, integrity and trust," said Greg Braca, president and CEO, TD Bank. "Throughout the period in question, TD had a clear process to secure formal consent before providing this service to customers, enabling them to make an informed and conscious choice.
“Prior to this settlement, TD had already voluntarily and proactively implemented enhancements to our Debit Card Advance disclosure and enrollment processes beginning in 2014. Although we disagree with the CFPB's conclusions, we have cooperated fully to resolve this matter and are moving forward with a continued focus on meeting the needs of our customers."
The consent order is available by clicking here.
The bureau specifically found that TD Bank charged consumers overdraft fees for ATM and one-time debit card transactions without obtaining their affirmative consent in violation of EFTA and Regulation E, both after new customers opened checking accounts at TD Bank branches and after new customers opened checking accounts at events held outside of Bank branches.
The bureau further found that when presenting DCA to new customers, TD Bank deceptively claimed DCA was a “free” service or benefit or that it was a “feature” or “package” that “comes with” new consumer-checking accounts. In fact, TD Bank charges customers $35 for each overdraft transaction paid through DCA and DCA is an optional service that does not come with a consumer-checking account.
When TD Bank enrolled some consumers in DCA over the phone, TD Bank deceptively described DCA as covering transactions unlikely to be covered by DCA. In some instances, TD Bank engaged in abusive acts or practices by materially interfering with consumers’ ability to understand DCA’s terms and conditions. In some cases, TD Bank: required new customers to sign its overdraft notice with the “enrolled” option pre-checked without mentioning the DCA service to the consumer at all; enrolled new customers in DCA without requesting the customer’s oral enrollment decision; and deliberately obscured, or attempted to obscure, the overdraft notice to prevent a new customer’s review of their pre-marked “enrolled” status in DCA.
The bureau also found that TD Bank violated FCRA and Regulation V by failing to establish and implement reasonable written policies and procedures concerning the accuracy and integrity of consumer-account information it furnished to two nationwide specialty consumer reporting agencies. The CFPB also found that TD Bank failed to conduct timely investigations of indirect consumer disputes concerning its furnishing to one of those specialty agencies.
To provide relief for consumers affected by TD Bank’s unlawful overdraft enrollment practices, the Bureau’s consent order requires TD Bank to provide an estimated $97 million in restitution to about 1.42 million consumers. TD Bank must also pay a civil money penalty of $25 million. The consent order also requires TD Bank to correct its DCA enrollment practices, stop using pre-marked overdraft notices to obtain a consumer’s affirmative consent to enroll in DCA, and adopt policies and procedures designed to ensure that TD Bank’s furnishing practices concerning nationwide specialty consumer reporting agencies comply with all applicable Federal consumer financial laws.
TD Bank is headquartered in Cherry Hill, New Jersey, and operates about 1,250 locations throughout much of the eastern part of the country.
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