TD Bank agreed to pay the settlement after the Consumer Financial Protection Bureau (CFPB) accused the bank of illegally charging $35 overdraft fees for ATM and debit card transactions without consent.
The $35 fees were issued as part of a program advertised as a “free” service, or a “feature” that “comes with” new checking accounts. In some cases, consumers were enrolled without agreeing to join.
The optional service is the Debit Card Advance (DCA). It authorizes TD Bank to pay for ATM and debit card transactions when a consumer does not have enough money in their account. If the transaction overdrafts the account by more than $5, the consumer is charged $35.
The settlement requires TD Bank to pay around $97 million to about 1.42 million consumers, plus a civil money penalty of $25 million. The agreement also requires TD Bank to fix its DCA enrollment practices.
Source: Consumer Financial Protection Bureau Announces Settlement with TD Bank for Illegal Overdraft Practices