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TD Bank has agreed to pay $122 million in a settlement with the CFPB regarding claims that the bank deceptively charged overdraft fees for certain ATM and one-time debit card transactions. The bureau issued a consent order against TD Bank last week citing that the bank marketed its optional overdraft service as free while charging customers $35 for each overdraft transaction.

“The Bureau found that TD Bank’s overdraft enrollment practices violated the Electronic Fund Transfer Act (EFTA) and Regulation E by charging consumers overdraft fees for the ATM and one-time debit card transactions without obtaining their affirmative consent,” the bureau said in its release on the settlement.

In addition, the bureau found that the bank engaged in unfair, deceptive and abusive acts or practices (UDAAP) that are in violation of the Consumer Financial Protection Act (CFPA) and the Fair Credit Reporting Act (FCRA).

TD Bank will pay an estimated $97 million in restitution to certain consumers enrolled in its Debit Card Advance (DCA) service and pay a $25 million civil money penalty. According to an American Banker article on the settlement, TD Bank does not admit to any wrongdoing under the civil settlement.

The CFPB earlier this year released a policy statement addressing the “abusive” prong of the UDAAP provision following calls by NAFCU to provide clarification. CFPB Director Kathy Kraninger said she intends to provide more clarity related to the factual basis for determining a covered person has violated the abusiveness standard, as well as the basis for abusiveness citations, in future supervisory highlights and materials.

Clarifying UDAAP has been a priority for Kraninger since she became director of the bureau.

NAFCU has long defended credit unions' use of responsible programs related to insufficient funds and is monitoring increased litigation risk related to overdraft programs, keeping credit unions informed while the industry and other financial institutions face class action lawsuits. The association has several compliance resources available online.