Podcast - The CFPB Takes Action on a Toronto-Based Bank’s Consumer Credit Reports

Anthony DiResta: Good day and welcome to another podcast of Clearly Conspicuous. As we've noted in previous sessions, our goals in these podcasts are to make you succeed in this current regulatory and governmental environment, make you aware of what's going on with the federal and state consumer protection agencies, and give you practical tips for success. As always, it's a privilege to be with you today. Today we discuss a new order by the Consumer Financial Protection Bureau requiring TD Bank to pay $28 million for breakdowns that allegedly tarnished consumer credit reports.

CFPB Orders Bank to Pay Consumers for Its Illegal Actions

On September 11, the Consumer Financial Protection Bureau ordered TD Bank to pay $7.7 million to tens of thousands of victims of the bank's illegal actions. For years, the bank allegedly 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 to TD Bank now are 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, according to the CFPB. As Director Chopra said, “The CFPB's investigation found the TD Bank illegally threatened the consumer reports of its customers with fraudulent information and then barely lifted a finger to fix it. 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.” Court language, huh?

Case Background

TD Bank is a national bank headquartered in Cherry Hill, New Jersey. It is one of many subsidiaries of Toronto-based Toronto-Dominion Bank. Toronto-Dominion Bank and its subsidiaries are collectively known as TD Bank Group. 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 the 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 whatsoever. TD Bank's actions affected hundreds of thousands of its customers. The banks action violated both the Fair Credit Reporting Act and the Consumer Financial Protection Act. With respect to the 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 Fine and for engaging in unfair, deceptive or abusive action practices. The CFPB's order requires TD Bank, among other things, to pay redress to affected customers and to pay a $20 million penalty.

Key Takeaways

So here's the key takeaway: The CFPB is clearly focused on claims concerning the Fair Credit Reporting Act. Both the CFPB and FTC are concerned about inaccurate information on consumer credit reports. And there's a huge volume of consumer complaints going to consumer protection agencies concerning the problems flowing from credit reporting inaccuracies. Complaint management on FCRA matters is therefore crucial. So please stay tuned for further programs as we identify and address the key issues and developments and provide strategies for success. I wish you continued success and a meaningful day. Thank you.