CFPB Orders TD Bank to Pay $28 Million for Illegal Breakdowns that Potentially Tarnished Consumer Reports

WASHINGTON, D.C. – Today, the Consumer Financial Protection Bureau (CFPB) ordered TD Bank to pay $7.76 million to tens of thousands of victims of the bank’s illegal actions. For years, the bank repeatedly shared inaccurate, negative information about its customers to consumer reporting companies. The information included systemic errors about credit card delinquencies and bankruptcies. In addition to the redress, the CFPB is ordering TD Bank to pay a $20 million civil money penalty.

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’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,” said CFPB Director Rohit Chopra. “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.”

TD Bank, N.A. is a national bank headquartered in Cherry Hill, New Jersey. It is one of many subsidiaries of Toronto-based Toronto-Dominion Bank (NYSE: TD). Toronto-Dominion Bank and its subsidiaries are collectively known as TD Bank Group. TD Bank Group reported Can$489 billion in assets under management as of the second quarter of 2024. The U.S.-based TD Bank is the tenth-largest commercial bank in the country with more than 1,200 branches. As of June 30, 2024, TD Bank had approximately $370 billion in total assets. Among the products and services offered by TD Bank are credit cards and deposit accounts. TD Bank furnishes information to credit and other consumer reporting companies about its customers related to their credit cards and deposit accounts. In February 2022, TD Bank announced that it would acquire another large financial institution, First Horizon Bank. The deal was later abandoned.

The CFPB’s investigation found that for several years TD Bank repeatedly gave inaccurate account information to consumer reporting companies. At times, 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 both the Fair Credit Reporting Act and the Consumer Financial Protection Act.

Specifically, TD Bank harmed consumers by:

• Failing to fix its credit card reporting errors: TD Bank reported inaccurate information about its customers’ credit card accounts to consumer reporting companies. Even though it knew it was sending incorrect information for consumer reports, the bank failed to promptly correct its mistakes. In some instances, TD Bank shared inaccurate information about credit card delinquencies. In other instances, the bank shared information that made it look like accounts were in use even though customers had voluntarily closed them.
• Sharing fraudulent information with consumer reporting companies: By January 2022, TD Bank identified hundreds of thousands of deposit account openings that were either confirmed or suspected to be fraudulent. By April 2023, instead of making sure only accurate information about its customers was sent to consumer reporting companies, TD Bank kept sharing fraudulent information about those accounts as if it belonged to the bank’s customers. Derogatory information, including information that some of the fraudulent accounts were overdrawn, was shared with consumer reporting companies.
• Failing to investigate and resolve consumer disputes: TD Bank did not have sufficient processes in place to investigate consumer reporting disputes and diverted resources from investigating disputes to other parts of its business. It then, among other things, failed to conduct reasonable and timely investigations of consumer disputes, including sometimes by not conducting any investigation at all. It also failed to properly notify consumers after deeming a dispute frivolous or irrelevant.

Enforcement Action

Under the 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 CFPB’s order requires TD Bank, among other things, to:

• Pay redress to affected consumers: TD Bank must pay $7.76 million in redress to tens of thousands of consumers affected by its unlawful behavior.
• Pay a $20 million penalty: TD Bank will pay $20 million to the CFPB’s victims relief fund.

Read today’s order.

This is the CFPB’s second enforcement action against TD Bank. In 2020, the CFPB ordered TD Bank to provide an estimated $97 million in restitution to about 1.42 million consumers and to pay a $25 million penalty for illegal overdraft practices.

Learn more about credit reports and scores.

Read the CFPB’s April 2024 report on violations of credit report accuracy requirements.

Read consumer complaints about TD Bank and credit furnishing.

Consumers can submit complaints about financial products and services by visiting the CFPB’s website or by calling (855) 411-CFPB (2372).

Employees who believe their company has violated federal consumer financial protection laws are encouraged to send information about what they know to whistleblower@cfpb.gov. To learn more about reporting potential industry misconduct, visit the CFPB’s website.