TD Bank Fined $28 Million for Misleading Credit Reporting: What You Need to Know
By Jonathan Stempel
(Multibagger) - In a significant move, TD Bank has been slapped with a nearly $28 million penalty by the U.S. Consumer Financial Protection Bureau (CFPB) for disseminating inaccurate, negative information about its customers to credit reporting agencies. This erroneous data has the potential to unfairly damage customers' credit scores.
Key Findings of the CFPB Investigation
The CFPB highlighted that since 2015, TD Bank has been sharing incorrect details regarding:
- Personal bankruptcies
- Credit card delinquencies
- Closed accounts
- Accounts suspected of fraud
Notably, the bank often took over a year to rectify these errors and neglected some disputes due to resource diversion and distractions, including a failed bid to acquire Tennessee-based First Horizon.
The Impact of TD Bank’s Actions
According to the CFPB, TD Bank’s misconduct took undue advantage of customers' inability to monitor their credit information accurately. This “abusive” practice has resulted in severe consequences for many, potentially affecting their ability to secure loans or favorable interest rates.
CFPB Director Rohit Chopra stated, "TD Bank illegally threatened the consumer reports of its customers with fraudulent information and then barely lifted a finger to fix it."
Financial Repercussions for TD Bank
The $28 million penalty includes:
- A $20 million civil fine
- $7.76 million in restitution to tens of thousands of affected customers
Despite the ruling, TD Bank has neither admitted nor denied wrongdoing. The bank has stated that it has voluntarily and proactively improved its procedures for handling credit information and disputes.
Background on TD Bank
With over $400 billion in assets and 1,150 branches across the eastern United States, TD Bank is one of the top 10 largest commercial banks in the U.S. It is a subsidiary of Toronto-Dominion Bank, based in Toronto, Canada.
This is not the first time TD Bank has faced scrutiny from the CFPB. In August 2020, the bank was ordered to pay $122 million in fines and restitution for misleading customers about overdraft fees on ATM and debit card transactions.
Breaking Down the Impact for You
What Happened?
TD Bank was penalized for providing incorrect credit information about its customers to credit agencies, which could harm their credit scores.
Why Should You Care?
Credit scores are crucial for obtaining loans, credit cards, and even housing. Incorrect information could lead to higher interest rates or loan denials, costing you more in the long run.
How Does This Affect You?
If you are a TD Bank customer, your credit score might have been unfairly impacted. The bank is now required to pay restitution, which means you could be entitled to compensation if you were affected.
What Can You Do?
- Check your credit report regularly to ensure accuracy.
- Dispute any inaccuracies with your bank and the credit reporting agencies.
- Stay informed about your bank's practices and any potential regulatory actions against them.
In summary, this enforcement action by the CFPB serves as a reminder to monitor your credit reports vigilantly and be aware of your financial institution's practices. The penalty against TD Bank underscores the importance of accurate credit reporting and the severe consequences of misleading information.