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
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