TD Bank will pay $122M to resolve charges related to overdraft fees
The Consumer Financial Protection Bureau (CFPB) has reached an agreement with TD Bank, settling civil charges concerning its optional overdraft services: Debit Card Advance- DCA. The charge covers the four years within 2014 and 2018. The CFPB claims that TD Bank offered the program as a free service that is part of its checking accounts. However actuality, the agency says customers were charged $35 every time the bank covered an overdraft. Without acknowledging liability, the bank consented to pay $122 million to compensate for the charges. Of that amount, $97M will be paid as a result of the affected customers.
The Bureau said that TD Bank’s overdraft program violated the Electronic Fund Transfer Act and Regulation by charging customers overdraft fees at the ATM and one-time debit card transactions without their consent or acknowledgment.
Moreover, TD Bank was involved in “deceptive and abusive acts or practices” in violation of the customer Financial Protection Act (CFPA 2019). If that wasn’t enough, the Bureau accused TD Bank of involving in practices forbidden by the Fair Credit Reporting Act (FCRA).
Are The Charges Accurate?
TD Bank disputes the dilemma of the cost comes right down to arrangement. Greg Braca, TD Bank CEO, states that clients who combined this service approved TD Bank to repay ATM and one-time charge card transactions when they do not have enough cash-free in their accounts to pay trades. “During the time in question, TD needed a very clear procedure to procure formal approval before providing this support to clients, letting them create an informed and conscious option,” Braca said.
“DCA supplies customers with a secure, dependable supply of short-term liquidity also helps prevent the aggravation that may come from diminished transactions.”
However, the CFPB points out that advantage also includes a $35 per transaction fee, which was common before the 2010 legislation was enacted. In reality, bank clients were billed this overdraft fee unless they expressly “opted-out” of the policy before 2010.
Consequently, many customers bitterly complained that they might stand up as many as five 35 charges on a single shopping excursion. Many said they’d favor their buy be diminished if they lacked adequate funds in their accounts. The 2010 law turned around, just allowing banks to supply”overdraft protection” to clients who especially opted-in for the policy. Clients who failed to opt-in could have buys dropped when they lacked the capital, but they wouldn’t be charged a commission.