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TD Bank Fined for Misconduct Related to Overdraft Service
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The Consumer Financial Protection Bureau (“CFPB”) has ordered TD Bank, the U.S. unit of The Toronto-Dominion Bank (TD - Free Report) , to pay $97 million in restitution and $25 million in civil penalties for wrongly charging fees to consumers on its optional overdraft service, without their consent, after claiming it was a free service.
Notably, Debit Card Advance (“DCA”) is TD Bank’s optional overdraft service. Consumers who enroll themselves in the service allow the bank to pay ATM and one-time debit card transactions when they don't have enough money in their accounts. Prior to enrolling customers in the DCA service, the bank obtains their formal consent.
However, the CFPB said in its statement that in 2014, TD Bank asked its bankers to present to certain off-site applicants of its DCA as a “free” service or benefit, while moderating the fees and disclosures associated with the service. In fact, bankers told customers that the accounts were a “feature” or “package” that came with all new consumer-checking accounts, rather than giving them the chance of opting into it.
The CFPB also claimed that the bank could not establish reasonable written policies regarding consumer-account information it provided to two specialty consumer reporting agencies. In fact, TD Bank also issued pre-marked disclosure notices in some cases.
While TD Bank has agreed to pay the penalty, it has neither admitted nor denied wrongdoing.
TD Bank’s president and CEO, Greg Braca, stated, “Throughout the period in question, TD had a clear process to secure formal consent before providing this service to customers, enabling them to make an informed and conscious choice.”
He added, “At TD, we put our customers first and our business is built on a foundation of ethics, integrity and trust.”
Our Take
Increased scrutiny on global banks for their business practices has caused many of these firms to pay billions of dollars as fines and compensation to settle lawsuits and probes. Many investors have lost their hard-earned money as a result of such business malpractices. Nevertheless, such settlements help restore investors’ confidence in banks and their operations.
Recently, the Bank of Nova Scotia (BNS - Free Report) was fined $127.5 million by the U.S. Department of Justice and the Commodity Futures Trading Commission for its improper practices in the metals markets, making false statements and swap dealer compliance issues between January 2008 and July 2016.
Interactive Brokers Group, Inc. (IBKR - Free Report) has to pay $11.5 million to settle charges it repeatedly failed to file Suspicious Activity Reports for U.S. microcap securities trades executed on behalf of its customers.
Notably, shares of Toronto-Dominion have gained 18.9% over the past three months compared with 16.4% growth recorded by the industry.
Currently, the company carries a Zacks Rank #3 (Hold).
A better-ranked stock from the finance space is ETRADE Financial Corporation . It has witnessed an upward earnings estimate revision of 13% for the current year over the past 60 days. Its share price has risen 28% over the past three months. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
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TD Bank Fined for Misconduct Related to Overdraft Service
The Consumer Financial Protection Bureau (“CFPB”) has ordered TD Bank, the U.S. unit of The Toronto-Dominion Bank (TD - Free Report) , to pay $97 million in restitution and $25 million in civil penalties for wrongly charging fees to consumers on its optional overdraft service, without their consent, after claiming it was a free service.
Notably, Debit Card Advance (“DCA”) is TD Bank’s optional overdraft service. Consumers who enroll themselves in the service allow the bank to pay ATM and one-time debit card transactions when they don't have enough money in their accounts. Prior to enrolling customers in the DCA service, the bank obtains their formal consent.
However, the CFPB said in its statement that in 2014, TD Bank asked its bankers to present to certain off-site applicants of its DCA as a “free” service or benefit, while moderating the fees and disclosures associated with the service. In fact, bankers told customers that the accounts were a “feature” or “package” that came with all new consumer-checking accounts, rather than giving them the chance of opting into it.
The CFPB also claimed that the bank could not establish reasonable written policies regarding consumer-account information it provided to two specialty consumer reporting agencies. In fact, TD Bank also issued pre-marked disclosure notices in some cases.
While TD Bank has agreed to pay the penalty, it has neither admitted nor denied wrongdoing.
TD Bank’s president and CEO, Greg Braca, stated, “Throughout the period in question, TD had a clear process to secure formal consent before providing this service to customers, enabling them to make an informed and conscious choice.”
He added, “At TD, we put our customers first and our business is built on a foundation of ethics, integrity and trust.”
Our Take
Increased scrutiny on global banks for their business practices has caused many of these firms to pay billions of dollars as fines and compensation to settle lawsuits and probes. Many investors have lost their hard-earned money as a result of such business malpractices. Nevertheless, such settlements help restore investors’ confidence in banks and their operations.
Recently, the Bank of Nova Scotia (BNS - Free Report) was fined $127.5 million by the U.S. Department of Justice and the Commodity Futures Trading Commission for its improper practices in the metals markets, making false statements and swap dealer compliance issues between January 2008 and July 2016.
Interactive Brokers Group, Inc. (IBKR - Free Report) has to pay $11.5 million to settle charges it repeatedly failed to file Suspicious Activity Reports for U.S. microcap securities trades executed on behalf of its customers.
Notably, shares of Toronto-Dominion have gained 18.9% over the past three months compared with 16.4% growth recorded by the industry.
Currently, the company carries a Zacks Rank #3 (Hold).
A better-ranked stock from the finance space is ETRADE Financial Corporation . It has witnessed an upward earnings estimate revision of 13% for the current year over the past 60 days. Its share price has risen 28% over the past three months. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Click here for the 6 trades >>