- The U.S. Consumer Financial Protection Bureau ordered TD Bank (TSX:TD; NYSE:TD) to pay US$28 million in compensation and fines.
- CFPB punished Toronto-Dominion Bank for filing inaccurate and negative consumer reports about its customers.
- The bank must pay a US$20 million civil money penalty and US$7.76 million to tens of thousands of victims of the bank’s illegal actions.
- TD Bank Group had $1.97 trillion in assets as of April
The U.S. Consumer Financial Protection Bureau (CFPB) on Wednesday ordered TD Bank (TSX:TD; NYSE:TD) to pay US$28 million in compensation and fines for filing inaccurate and negative consumer reports about its customers.
CFPB ordered Toronto-Dominion Bank to pay a US$20 million civil money penalty and US$7.76 million to tens of thousands of victims of the bank’s illegal actions. According to the CFPB’s news release, the bank over a number years repeatedly shared inaccurate, negative information about its customers to consumer reporting companies.
“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.”
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. The inaccurate information shared by TD Bank related to credit card and bank deposit accounts, including accounts TD Bank knew or suspected were fraudulently opened. After the bank realized it was botching its reporting to consumer reporting companies, it took far too long to correct many of its errors.
The CFPB action is more bad news for TD Bank’s reputation in the United States, where it has become the 10th-largest commercial bank in the country. Last month, TD Bank set aside US$2.6 billion to pay for fines it expects to pay by the end of the year for money laundering violations. U.S. regulators, along with the Financial Crimes Enforcement Network and the U.S. Department of Justice have been investigating the big bank.
In its investigation, CFPB found that for several years TD Bank repeatedly gave inaccurate account information to consumer reporting companies. At times, according to the agency, the information contained systemic errors about personal bankruptcies and credit card delinquencies. Other times, the bank gave consumer reporting companies information it knew or suspected was fraudulent. The bank knew of many of these inaccuracies for more than 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. TD Bank’s actions affected hundreds of thousands of its customers. The bank’s actions violated the Fair Credit Reporting Act and the Consumer Financial Protection Act.
Under the U.S. Consumer Financial Protection Act, the CFPB has the authority to take action against institutions violating consumer financial protection laws, including the Fair Credit Reporting Act and its implementing regulation, Regulation V, and for engaging in unfair, deceptive, or abusive acts or practices.
The US$20 million penalty will be paid to the CFPB’s victims relief fund.
The Toronto-Dominion Bank and its subsidiaries are collectively known as TD Bank Group. TD is the sixth largest bank in North America by assets and serves more than 27.5 million customers. TD had $1.97 trillion in assets on April 30, 2024.
Shares of Toronto-Dominion Bank (TSX:TD) were up 0.76 per cent, trading at C$83.71 at 2:53 pm ET.
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