TCF National Bank reached a $25 million-plus
settlement with the Consumer Financial Protection Bureau to resolve litigation
alleging the bank violated rules regarding its marketing and sale of overdraft
services. The Bureau’s press release announcing the settlement stated that it alleged
in its lawsuit that when attempting to obtain proper legal consent from
consumers to charge overdraft fees, TCF obscured the fees it charged and made
consenting to overdraft fees seem mandatory for new customers to open an
account. Banks are required by Reg. E, 12 CFR 1005.17, to obtain a customer’s
consent before they can lawfully charge overdraft fees on ATM withdrawals and
one-time debit purchases, the Bureau noted.
TCF agreed to abide by an injunction not to
engage in such practices and to pay $25 million in restitution to customers the
bank charged fees for overdrafts. The proposed order would also impose a $5 million civil money
penalty, which would be adjusted to account for a $3 million penalty imposed on
the bank by the Office of the Comptroller of the Currency as part of a separate
action. In its proposed agreement with the Bureau, TCF did not admit to any
wrongdoing.
The agreement requires TCF to send a letter to
all TCF customers who opted in to accept overdraft fees before May 1, 2015, that
only includes a copy of a federal notice entitled "What You Need to Know About
Overdrafts and Overdraft Fees." In addition, TCF would have to contact all
consumer reporting agencies to request that any information TCF provided about
covered overdraft fees paid by its customers in the past seven years "be
corrected to update or remove such information." TCF would also have to submit a
plan within 60 days of the effective settlement detailing how customers would
receive a pro-rated share of the $25 million settlement based on the number of
covered overdraft charges.
TCF said in a statement it is "pleased to have reached a resolution" to the
litigation. "We believe that we have thoroughly addressed these issues and that
our disclosures comply with all laws and regulations," TCF said. "We believe it
is in the best interests of our customers, shareholders and other stakeholders
to avoid continuing a protracted and expensive lawsuit, and instead focus solely
on executing our strategy to grow our business and drive value for our
shareholders."
The company added it believes it has gone "above
and beyond compliance standards outlined in Regulation E....In fact, the OCC
notes in its consent order that during the period in question we provided
customers with written disclosures concerning our overdraft service that
complied with the technical requirements of Regulation E."
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