The CF Plaintiffs have filed a breach of contract claim against TD Bank Canada and the CFPB is investigating the overdraft practices of the bank. This article provides an overview of CF Plaintiffs’ allegations and TD Bank’s response to the breach of contract claim. If you have a question about the suit, please feel free to contact us. We are happy to assist you with your legal needs.
CFPB investigation of TD Bank’s overdraft practices
The CFPB has opened an investigation into the overdraft charges TD Bank imposed on customers. The bank allegedly charged $35 for each overdraft transaction even though customers were unaware of the charges and did not consent to them. The bank also misrepresented its coverage, including by implying that enrollment in DCA was automatic. Further, it failed to obtain customer consent to enroll in the service and did not bring the necessary documentation to offsite events.
After a lengthy investigation, the CFPB and TD Bank have reached a settlement agreement that will provide restitution to over one million consumers. TD Bank is an American subsidiary of the Toronto-Dominion Bank in Canada. It has approximately 1,250 branches nationwide and employs more than 26,000 people. As part of the settlement, the bank agreed to pay restitution to overdraft customers and settle a $25 million civil penalty over its illegal overdraft practices. TD Bank charges an overdraft fee when a customer’s account balance falls below zero.
CF Plaintiffs’ breach of contract claim
CF Plaintiffs’ breach of contract claim alleges that TD Bank Canada imposed unfair overdraft fees after failing to properly disclose certain fees. The complaint reveals that the standard PDAA does not impose overdraft fees until a negative available balance exceeds $5. TD’s favored portion of the PDAA relies on a negative available balance, which may not be relevant to plaintiff’s breach of contract claim.
CF Plaintiffs allege that TD Bank Canada violated the EFTA and Regulation E by imposing overdraft fees on consumers without their consent. The bank is also accused of imposing overdraft fees without consent when new customers opened accounts in TD Bank branches and other events outside the bank. In light of these allegations, TD Bank Canada has agreed to pay a settlement of $70 million.
TD Bank’s defense of unfair overdraft fees
In 2013, the federal government and the Consumer Financial Protection Bureau brought legal action against TD Bank, alleging unfair overdraft fee practices. The Bank required its customers to opt-in to an overdraft program or face fees. TD Bank’s overdraft fee policy charges customers $35 for each overdraft over $5. The bank may levy up to five overdraft fees on a single account per day.
A class action was brought against TD Bank Canada after it began charging consumers excessive overdraft fees. This included consumers who did not know they could opt out of paying overdraft fees. The bank defended its practices by claiming that they were free to use, but later changed the order in which they process transactions. The practice exacerbates the problem by causing consumers’ accounts to deplete faster than they would otherwise have.
TD Bank’s response to CF Plaintiffs’ breach of contract claim
TD Bank’s response to CF plaintiffs’ breach of contract claim for unfair overdraw charges does not address the specifics of the available balance claims. Rather, it disputes the plaintiffs’ claim that TD improperly assessed overdraft fees based on the available balance instead of the actual balance. The plaintiffs’ proposed trial plan seeks to use the PDAA and its standardized form as a basis for their class action.
The Court noted that the Bank’s disclosures for overdraft fees were identical across its customer base. Therefore, it is unclear whether customers could have understood OD Points and the Pay Matrix without knowing that they were charged with fees that exceeded their available balance. This issue could be resolved through class-wide proof. While TD’s response is not entirely convincing, the Court notes that a majority of its class members could have benefited from the TD Bank’s disclosures.