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TD Bank ordered to pay $122 million for overdraft enrollment practices: U.S. consumer agency – Metro US

TD Bank ordered to pay $122 million for overdraft enrollment practices: U.S. consumer agency

FILE PHOTO: Phase 2 of the reopening from the coronavirus
FILE PHOTO: Phase 2 of the reopening from the coronavirus disease (COVID-19) restrictions in Toronto

WASHINGTON/TORONTO (Reuters) – TD Bank has been ordered to pay $97 million in restitution and $25 million in civil penalties for charging U.S. consumers fees without consent on its optional overdraft service, the U.S. Consumer Financial Protection Bureau (CFPB) said on Thursday.

The U.S. unit of Toronto-Dominion Bank <TD.TO> charged consumers overdraft fees for ATM and one-time debit-card transactions without their consent, after claiming it was a free service. That violated regulations that govern electronic funds transfers, the agency said in a statement announcing one of its largest orders against a U.S. lender under the Trump administration.

TD also failed to establish reasonable written policies regarding consumer-account information it provided to two specialty consumer reporting agencies, the CFPB said.

It also issued pre-marked disclosure notices in some cases.

As early as 2014, TD managers instructed bankers to present to certain off-site applicants of its Debit Card Advance (DCA) as a “free” service or benefit, while downplaying the fees and disclosures associated with the service, the CFPB said in its order. Bankers were also required to frame the accounts as a “feature” or “package” that “comes with” all new consumer-checking accounts, rather than as an option that new customers must opt into, the CFPB found.

TD did not admit or deny the CFPB’s allegations, but agreed to pay the retribution to nearly 1.5 million customers, the agency said.

It also required TD Bank to correct its DCA enrollment practices and to stop using pre-marked overdraft notices to obtain a consumer’s consent to enroll, among other changes, the agency said.

“Throughout the period in question, TD had a clear process to secure formal consent before providing this service to customers, enabling them to make an informed and conscious choice,” said the bank’s president and CEO, Greg Braca.

“At TD, we put our customers first and our business is built on a foundation of ethics, integrity and trust,” he added.

(Reporting by Katanga Johnson and Nichola Saminather; Editing by Sandra Maler and Dan Grebler)