TORONTO — The U.S. arm of TD Bank Group has reached a US$122-million settlement with the U.S. Consumer Financial Protection Bureau after an investigation into its marketing and sales practices related to its overdraft services.
The U.S. regulator's investigation centred around disclosure and enrolment practices related to an overdraft service offered by TD Bank.
As part of the settlement, the bank will pay $97 million in restitution to roughly 1.42 million consumers and a civil money penalty of $25 million.
The bureau said TD's enrolment practices violated the Electronic Fund Transfer Act when it charged overdraft fees for ATM and one-time debit card transactions without obtaining consent after new customers opened chequing accounts at TD branches or at events held outside of those locations.
The bureau said TD marketed its debit card advance service as free or a benefit of new consumer-chequing accounts, but actually charged US$35 per customer for each overdraft transaction and the service was optional. As part of the settlement, the bank agreed to change its enrolment practices and stop using pre-marked overdraft notices to obtain a consumer's consent.
In a statement, TD said it did not admit to any wrongdoing under the settlement and had a clear process to secure proper consent when providing services.
"We disagree with the CFPB's conclusions, we have co-operated fully to resolve this matter and are moving forward with a continued focus on meeting the needs of our customers," said Greg Braca, TD's president and chief executive of U.S. operations.
This report by The Canadian Press was first published Aug. 21, 2020.
Companies in this story: (TSX:TD)
The Canadian Press
Note to readers: This is a corrected story. A previous version misstated TD's charge for overdraft transactions and said the bank was forced to change enrolment practices.