CFPB Issues Consent Order for Overdraft Protection Violations
On Aug. 20, 2020, the Consumer Financial Protection Bureau( CFPB) issued a consent order against TD Bank, N. A.( TD) for violating federal consumer protection laws with respect to its overdraft service. The bank’ s optional overdraft service violated both the Electronic Funds Transfer Act( Regulation E) and the Fair Credit Reporting Act( Regulation V). The 53-page consent order requires TD to pay $ 97 million in restitution to 1.42 million people and a $ 25 million civil money penalty.
Background
TD is a large bank, headquartered in New Jersey, with $ 355 billion in assets offering the following three overdraft options:
1. A“ standard” overdraft service, which covers transactions including checks, automated clearing house( ACH) and recurring debit-card transactions.
2. A debit card advance( DCA), which covers ATM and one-time debit card transactions.
3. A“ decline all” option, which opts the customer out of overdraft services for all transaction types.
New customers may enroll in DCA when opening a checking account online or at one of TD’ s branches. Existing checking account customers may enroll a new or existing checking account in the DCA option at any of the branches, online or over the phone.
Consumers enrolled in the DCA are charged a $ 35 overdraft fee, up to five times per day at TD’ s discretion, for each covered transaction( ATM and one-time debit card transactions) that exceeds a consumer’ s checking account available balance, including pending debit transactions, by more than $ 5.
Checking accounts come with the“ standard” overdraft
8