WASHINGTON, D.C. – The Consumer Financial Protection Bureau (Bureau) today announced a settlement with TD Bank, N.A. regarding its marketing and sale of its optional overdraft service: Debit Card Advance (DCA). TD Bank is headquartered in Cherry Hill, New Jersey, and operates about 1,250 locations throughout much of the eastern part of the country. The Bureau found that TD Bank’s overdraft enrollment practices violated the Electronic Fund Transfer Act (EFTA) 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 (CFPA). The Bureau also found that TD Bank engaged in practices prohibited by the Fair Credit Reporting Act (FCRA) and its implementing Regulation V. Today’s consent order requires TD Bank to provide an estimated $97 million in restitution to about 1.42 million consumers and to pay a civil money penalty of $25 million.
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 Bureau 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.
The Consumer Financial Protection Bureau (CFPB) is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit www.consumerfinance.gov.