WASHINGTON–The Consumer Financial Protection Bureau has announced a $122-million settlement with TD Bank over the marketing and sale of its optional overdraft service, Debit Card Advance (DCA).
The Bureau said it found Cherry Hill, N.J.-based TD Bank, which has approximately t 1,250 locations throughout much of the eastern part of the country, employed overdraft enrollment practices that 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.
The Bureau further said TD Bank engaged in deceptive and abusive acts or practices in violation of the Consumer Financial Protection Act of 2010 (CFPA), and that it found TD Bank engaged in practices prohibited by the Fair Credit Reporting Act (FCRA) and its implementing Regulation V.
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 Specifics
Specifically, the Bureau said it found 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 said it 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,” the Bureau said. “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.”
Other Allegations
In addition, the CFPB said it also found 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 further 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 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.