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TD Bank Agrees to $122 Million Settlement over Its “Free” Overdraft Protection

  • The Consumer Financial Protection Bureau (“CFPB”) reached a settlement with TD Bank, N.A. to resolve allegations that TD Bank’s marketing and enrollment practices relating to its Debit Card Advance (“DCA”), an overdraft protection offering, violated the Electronic Fund Transfer Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the Fair Credit Reporting Act.
  • According to the consent order, the CFPB alleged, among other things, that TD Bank charged customers overdraft fees for ATM and one-time debit card transactions without obtaining affirmative consent from customers who opened new TD Bank checking accounts, and that TD Bank misled consumers by presenting the DCA as a free feature that was part of a package with the new checking account even though TD Bank charged $35 for each DCA overdraft transaction and the DCA was an optional feature that consumers could decline.
  • The CFPB further alleged that TD Bank engaged in abusive practices that interfered with consumers’ ability to review and understand the DCA’s terms and conditions.
  • Under the terms of the consent order, TD Bank will be required to provide an estimated $97 million in restitution to affected customers. TD Bank will also pay $25 million in civil penalties to the CFPB, and it will correct its DCA enrollment practices to comply with consumer financial laws, among other things.