TD Bank, N.A. has been ordered to pay $20 million dollars in penalties due to a series of violations that have had substantial negative effects on consumers, particularly in the handling of credit card accounts and the furnishing of inaccurate information to Consumer Reporting Agencies (CRAs). According to a recent consent order from the Consumer Financial Protection Bureau (CFPB), the bank’s failings largely revolve around its violation of the Fair Credit Reporting Act (FCRA), as well as other regulatory lapses tied to consumer rights and financial protection.
A Litany of Consumer Harms
The core of TD Bank’s misconduct lies in its failure to maintain accurate and timely credit reporting, particularly concerning credit card accounts under its retail card services and U.S. bankcard portfolios. From 2015 to 2019, TD Bank inaccurately furnished information about more than 28,000 retail card accounts, resulting in consumers being wrongfully reported as delinquent even after they had settled or paid their accounts in full. This misreporting can have devastating effects on consumers’ financial lives, as inaccuracies on credit reports can hinder access to loans, housing, or employment opportunities. The bank only corrected this issue years after the fact, and even then, the harm was already done for many.
TD Bank also failed to properly report the dates of first delinquency, a crucial factor in determining how long negative information stays on a credit report. In more than 47,000 cases, the bank reported inaccurate delinquency dates, causing some negative information to stay on reports far longer than it should have. This type of reporting could result in extended damage to consumer credit scores, making it harder for them to regain financial stability.
The consent order also details how TD Bank failed to update the status of accounts identified as fraudulent. Thousands of fraudulent accounts remained inaccurately reported on consumers’ credit profiles, even after the bank had confirmed the fraud. The bank’s sluggish response left consumers vulnerable to identity theft impacts, forcing them to deal with the consequences of having fraudulent accounts associated with their names.
Neglect of Consumer Disputes
Adding to these violations, TD Bank failed to conduct reasonable and timely investigations of consumer disputes, both direct (where consumers contact the bank) and indirect (disputes submitted through CRAs). Over tens of thousands of disputes were either mishandled or outright ignored, sometimes for as long as seven months. This dereliction took place while the bank diverted resources away from its dispute resolution teams, prioritizing other regulatory matters, leaving consumers to fend for themselves. The CFPB highlighted that this failure took “unreasonable advantage of consumers’ inability to protect their interests,” classifying it as an abusive practice under federal law.
How Consumer’s Were Impacted
The scale of the impact is sobering: consumers faced long-term damage to their credit, compounded by TD Bank’s ongoing failure to furnish accurate information or correct errors in a timely manner. This misreporting led to higher interest rates on loans, rejection of credit applications, and even lost job opportunities for some individuals.
TD Bank’s internal controls were so lax that even bankruptcy statuses were not accurately reported. In some cases, consumers whose debts had been discharged in bankruptcy were still reported as delinquent. This oversight extended to more than 27,000 accounts, leaving consumers financially vulnerable even after they had legally resolved their debts.