U.S. regulator orders TD Bank to pay $28M US over consumer credit reports

TD Bank was ordered by a U.S. regulator on Wednesday to pay nearly $28 million US ($38 million Cdn) for repeatedly sharing inaccurate, negative information about its customers with credit reporting agencies, potentially tarnishing customers' credit scores.

The Consumer Financial Protection Bureau (CFPB) said that for several years, TD repeatedly provided inaccurate account information, including errors about personal bankruptcies and credit card delinquencies, and accounts that the bank knew or suspected were fraudulently opened.

The bank also took "far too long" to correct many mistakes, and did not investigate and resolve some consumer disputes because it had diverted resources to other parts of its business, the CFPB said.

"TD Bank illegally threatened the consumer reports of its customers with fraudulent information and then barely lifted a finger to fix it," CFPB director Rohit Chopra said in a statement.

"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."

The payout includes a $20 million US civil fine, plus $7.76 million US of restitution to tens of thousands of customers.

CBC News reached out to TD Bank for comment. A bank spokesperson responded that TD had "self-identified" these matters long before the settlement, and that it had "voluntarily and proactively implemented enhancements to our furnishing and dispute handling practices."

"TD co-operated fully to resolve this matter and is committed to continuing to deliver on its responsibilities to its customers," the statement said.

Latest reprimand of TD by U.S. regulators

Even when financial institutions have a system for reporting suspicious activity or identifying mistakes, those problems aren't necessarily escalated to the appropriate level, said Lynnette Purda, a professor in the school of business at Queen's University in Kingston, Ont. 

"There's layers of bureaucracy that we think are making a system better that perhaps are not and are in fact impeding it," Purda told CBC News.

"I think it's an important lesson for many financial institutions as they're tasked with monitoring the activity that they are witnessing in how to vet and escalate observations from their employees."

The settlement comes as the bank continues to face scrutiny in the U.S. over its anti-money laundering program, where it expects to pay more than $3 billion US in monetary penalties to resolve the issue.

In August, TD agreed to pay a $46.5-million US penalty to the SEC plus a total of $82 million US to the U.S. Commodity Futures Trading Commission for record-keeping violations, one of 26 banks part of a settlement.

WATCH | TD Bank admits failure on money laundering in U.S.: 

TD admits failure to stop money laundering at U.S. branches

7 months ago

Duration 2:08

After a major U.S. investigation, TD admitted it failed to stop criminals from using its branches to launder money. The Canadian-owned bank is one of several under investigation by the U.S. government and financial regulators.

In March, the bank was fined $9.2 million in March by the Financial Transactions and Reports Analysis Centre of Canada for failure to report suspicious transactions.

In 2020, the CFPB required TD Bank to provide $97 million US in restitution to consumers for unlawful overdraft enrolment practices, plus a penalty of $25 million US.