CFPB slaps TD Bank with $28M fine for consumer protection violations

The Consumer Financial Protection Bureau (CFPB) has ordered TD Bank to pay $28 million for illegal actions that could tarnish consumer credit reports and for not taking timely action to correct its errors.

The CFPB’s investigation found that for several years, TD Bank repeatedly gave inaccurate account information to consumer reporting companies, which at times contained systemic errors about personal bankruptcies and credit card delinquencies, the bureau said Wednesday.

Consumer credit reports are used by financial institutions, employers and landlords to decide whether to extend credit, housing or employment to a consumer.

The bank will pay $7.76 million in restitution to tens of thousands of customers and a $20 million civil penalty, according to the CFPB, due to violations of the Fair Credit Reporting Act and the Consumer Financial Protection Act.

CFPB’s investigation revealed that the bank identified hundreds of thousands of deposit account openings that were either confirmed or suspected to be fraudulent by January 2022. 

More than year later, the bank kept sharing fraudulent information about these accounts as if they belonged to the bank customers, the bureau said. 

“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,” CFPB Director Rohit Chopra said in a statement.

“Rather than treating its customers fairly and following the law, TD Bank’s management clearly cared more about growth and expanding its empire through mergers. Regulators will need to focus major attention on TD Bank to change its course.”

TD Bank said it cooperated to fully resolve the matter and is committed to continuing to deliver on its responsibilities to its customers.

“Long before this settlement, TD self-identified these matters and voluntarily and proactively implemented enhancements to our furnishing and dispute handling practices,” the bank said in an emailed response to HousingWire.

Headquartered in New Jersey, TD Bank operates about 1,250 locations across the country. It offers credit cards and deposit accounts, among other products and services. The bank had $370 billion in total assets in the second quarter of 2024.

In the mortgage space, TD Bank was the 55th-largest U.S. lender in the first quarter of 2024, originating $987 million in loans. That figure was down 34.6% year over year, according to Inside Mortgage Finance estimates. 

In August 2020, the CFPB ordered TD Bank to pay $122 million in fines and restitution for charging fees to consumers for ATM withdrawals and one-time debit card transactions without obtaining their consent to an optional overdraft service.