The Consumer Financial Protection Bureau (CFPB) has mandated TD Bank to pay approximately $28 million in penalties and redress. The decision follows an investigation that revealed the bank provided inaccurate and negative information about its customers to consumer reporting agencies. This misinformation has potentially harmed the credit reports of numerous consumers over several years.
CFPB has previously dealt with TD Bank concerning similar issues. In 2020, the bureau ordered the bank to pay around $122 million for alleged illegal overdraft practices. That case involved misleading customers about the Debit Card Advance (DCA) program for overdraft protection. The recent ruling shows a pattern of regulatory issues affecting TD Bank’s operations over time.
Another significant comparison is the difference in the financial impact of the two cases. The 2020 settlement was significantly larger, indicating that the current issues might be less severe but still problematic. The recurring nature of these issues, however, raises concerns about the bank’s compliance and consumer protection practices.
CFPB Findings
An extensive investigation by the CFPB found that TD Bank repeatedly provided inaccurate information to consumer reporting agencies. The bank also failed to properly address disputes raised by customers and agencies. CFPB Director Rohit Chopra stated that the bank “illegally threatened the consumer reports of its customers with fraudulent information” and criticized TD Bank’s management for prioritizing growth over legal compliance.
The CFPB’s investigation found that TD Bank illegally threatened the consumer reports of its customers with fraudulent information and then barely lifted a finger to fix it.
TD Bank’s Response
Responding to the CFPB’s findings, TD Bank asserted that it had identified these issues independently and had already made improvements. The bank emphasized its commitment to resolving the matter and fulfilling its responsibilities to its customers. In a statement to PYMNTS, TD Bank claimed it proactively enhanced its furnishing and dispute handling practices.
Long before this settlement, TD self-identified these matters and voluntarily and proactively implemented enhancements to our furnishing and dispute handling practices.
The CFPB’s order includes $7.76 million in redress to consumers and a $20 million penalty. This decision underscores the importance of accurate information in consumer financial reporting and the role of regulations in protecting consumers from potential harm. The enforcement action by the CFPB aims to ensure that TD Bank rectifies its practices and prevents future inaccuracies.
Notably, the case highlights the ongoing challenges in the banking sector regarding compliance and consumer protection. It serves as a reminder that financial institutions must prioritize accurate reporting and effective dispute resolution to build trust with consumers. Regulatory bodies like the CFPB play a crucial role in monitoring and enforcing these standards, ensuring that consumers are not adversely affected by the actions of financial institutions.
