TD Bank forced to pay C$37M for "illegal actions" in the US

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American regulators have ordered TD Bank to pay more than C$37 million for “illegal actions” in the US.

In a decision posted on its website, the Consumer Financial Protection Bureau (CFPB) stated that TD Bank Group — a subsidiary of the Canadian-based Toronto-Dominion Bank — will need to pay US$7.76 million to “tens of thousands of victims of the bank’s illegal actions.”

In addition, TD Bank will also need to pay a US$20 million penalty.

According to the CFPB, TD Bank, for years, repeatedly shared “inaccurate, negative information about its customers to consumer reporting companies.” This information was found to have included systemic errors about credit card delinquencies and bankruptcies

“Consumer reports, including credit reports, employment screening reports, tenant screening reports, and other background reports, are used by financial institutions, employers, and landlords, among others, to decide whether to extend credit, housing, or employment to a consumer,” reads the release.

The false information shared by TD was tied to credit card and bank deposit accounts, including accounts TD Bank knew, or suspected, were fraudulently opened.

Today, the @CFPB is ordering @TDBank_US to pay $28 million for illegally tarnishing the credit reports of its customers with fraudulent information.

And when they found out, they barely lifted a finger to fix it. https://t.co/1rkZNBtBVn pic.twitter.com/63D3BsV9Gk

— Rohit Chopra (@chopracfpb) September 11, 2024

The bureau also accused the bank of taking “far too long” to correct the errors.

“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,” said CFPB Director Rohit Chopra.

According to the CFPB, the bank knew of many of these inaccuracies for over a year before fixing them. Additionally, when customers or consumer reporting companies submitted disputes to TD Bank, it failed to conduct proper investigations and sometimes to conduct any investigation at all.

Specifically, TD Bank harmed consumers by:

Failing to fix its credit card reporting errors: TD Bank reported inaccurate information about its customers’ credit card accounts to consumer reporting companies. Even though it knew it was sending incorrect information for consumer reports, the bank failed to promptly correct its mistakes. In some instances, TD Bank shared inaccurate information about credit card delinquencies. In other instances, the bank shared information that made it look like accounts were in use even though customers had voluntarily closed them.
Sharing fraudulent information with consumer reporting companies: By January 2022, TD Bank identified hundreds of thousands of deposit account openings that were either confirmed or suspected to be fraudulent. By April 2023, instead of making sure only accurate information about its customers was sent to consumer reporting companies, TD Bank kept sharing fraudulent information about those accounts as if it belonged to the bank’s customers. Derogatory information, including information that some of the fraudulent accounts were overdrawn, was shared with consumer reporting companies.
Failing to investigate and resolve consumer disputes: TD Bank did not have sufficient processes in place to investigate consumer reporting disputes and diverted resources from investigating disputes to other parts of its business. It then, among other things, failed to conduct reasonable and timely investigations of consumer disputes, including sometimes by not conducting any investigation at all. It also failed to properly notify consumers after deeming a dispute frivolous or irrelevant.

This is the second time the US-based CFPB has taken action against TD Bank after ordering the bank to pay more than C$130 million in restitution and penalties for illegal overdraft practices in 2020.