The Consumer Financial Protection Bureau and TD Bank announced a settlement Thursday of more than $120 million in response to an investigation into the marketing and sales of the bank's overdraft service.
What Happened: The CFPB investigation found that TD Bank was charging clients overdraft fees for ATM and one-time debit card transactions without the explicit consent of clients. The investigation found that the bank's debit card advance program was marketed as “free” when in reality, the bank was charging users $35 per transaction through this program.
TD Bank was ordered by the bureau to provide $97 million in restitution to affected clients and also pay a $25-million civil penalty to the bureau.
The $97 million will be distributed to an estimated 1.27 million clients, per the bureau’s press release.
Why It’s Important: TD Bank has over 1,200 locations in the United States and a reported $355 billion in assets. It's a subsidiary of Toronto-Dominion Bank (NYSE: TD).
TD Bank was signing clients up for costly services after marketing the service as a benefit to their clients between 2014-2018.
There's no word on how much the bank may have benefited. Nationwide, overdraft fees cost Americans over $11 billion in 2019 alone, the Center for Responsible Lending has reported.
The bank is not the first national bank to be accused of signing clients up for services that they had to pay for without their knowledge.
In 2016, Wells Fargo (NYSE: WFC) was hit with a $185-million penalty after the CFPB found the bank was engaging in deceptive practices by opening accounts and applying for credit cards under clients' names.
What’s Next: TD Bank President Greg Braca did not admit to any wrongdoing in a press release.
“Although we disagree with the CFPB's conclusions, we have cooperated fully to resolve this matter and are moving forward with a continued focus on meeting the needs of our customers," he said.
See more from Benzinga
© 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.