On 8/20/2020, the CFPB announced a settlement with TD Bank regarding its marketing and sale of its optional overdraft service, referred to by the as Debit Card Advance (DCA). According to their release, the CFPB stated 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.”
“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.”
These practices were found to be violations of Regulation E and/or UDAAP.
In addition to the issues with their overdraft practices, the CFPB 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.”
The 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 53-page consent order can be found here.
