TD Bank Ordered to Pay Out $7.76 Million to Customers: Are You One of Them?

In September 2024, the Consumer Financial Protection Bureau (CFPB) issued a $28 million fine against TD Bank, including $7.76 million in restitution to its customers. According to the Bureau, TD Bank had issued inaccurate or fraudulent information about its customers for years to credit reporting companies. This harmed those customers’ credit scores and caused a number of problems, from more expensive loans to difficulty finding housing and employment. If you are a current customer or have used TD Bank in recent years, this is what you should know.

You can also speak to a financial advisor about protecting your credit and finances.

TD Bank Issued Fraudulent Credit Information

TD Bank is a domestic subsidiary of a Canadian company called Toronto-Dominion Bank. It does business in the United States and is based in Cherry Hill, New Jersey.

According to the CFPB, the U.S. subsidiary of TD Bank has reported systematically false information about its customers to credit reporting agencies for the past several years. This included incorrect information about credit card delinquency and bankruptcies, as well as information about accounts that the bank knew or suspected to be fraudulent. This had a significant negative impact on some customers’ credit scores.

By January 2022, the bank had identified “hundreds of thousands” of fraudulent depository accounts. These were accounts fraudulently opened and operated in a customer’s name, according to the CFPB.

Rather than correcting this problem, the bank continued to share information with credit agencies as if those accounts belonged to the named customer–despite knowing this information was false. This led to the sharing of negative information, such as reports of overdrawn accounts.

Learn more: If you are in need of a new place to keep your money, compare savings accounts from these banks.

TD Bank Failed To Correct or Respond to Customer Complaints

The CFPB has also found that TD Bank neglected to take any corrective action once it became aware of many of these problems.

A financial institution is required to ensure that its reporting is fair and accurate. Among other statutes, this is enforced through the Fair Credit Reporting Act. Banks must actively take measures to ensure their information is correct, and they must respond to complaints raised by their customers.

According to regulators, TD Bank did neither. Even after the institution knew that it was sharing inaccurate information about depository accounts, overdrafts, bankruptcies and credit card delinquencies, it continued to submit this information to credit reporting agencies. It also continued issuing credit reports on customers who had closed their accounts, making it look as though they were active customers.

The bank also neglected to respond when customers reported these problems themselves. As the CFPB wrote in its enforcement announcement, the bank moved resources from its dispute resolution team to other parts of the business. It then “failed to conduct reasonable and timely investigations of customer disputes, including sometimes by not conducting any investigation at all.”

This violated the bank’s obligations under the Consumer Financial Protection Act.

Harm And Redress To Customers

All of this has done real harm to TD Bank’s customers.

This inaccurate information lowered credit scores for the affected customers. The impact is potentially extensive since, today, credit scores are used by almost every aspect of society. A bad credit score can affect not only lending and interest rates but also someone’s ability to get a job, housing, transportation and other essentials.

In response, the CFPB has ordered two penalties. First, TD Bank must repay a combined $7.76 million to affected customers. Second, the bank must pay a $20 million penalty to the agency itself.

If you are a customer of TD Bank, there are a few things to note about this enforcement action. Perhaps, the most important is that the CFPB’s order does not directly address the potential harm. TD Bank has not been ordered to issue corrected information to credit reporting agencies, nor does it actively have to ensure that customers’ credit reports have been updated and repaired. Similarly, credit agencies have not been required to independently ensure that their reports are accurate.

As a result, customers of TD Bank must ensure that their credit reports are complete and accurate on their own. Disputing errors on your credit report can be a difficult and time-consuming process, so it is important to get started as quickly as possible. Consider speaking to a financial advisor if you have questions or need assistance.

Second, make sure that you have not been inaccurately charged overdraft fees due to fraudulent accounts. In 2023 alone, TD Bank made $210 million in overdraft fees.

It is important to review your own accounts to check that the bank has not been billing you for fees on accounts you did not open. Also, consider switching banks. You can start by comparing savings accounts.

Finally, if you believe that you were negatively impacted by TD Bank’s inaccurate reporting, you have two options to follow up. You can contact the bank directly to ask about restitution under this consent order. TD Bank is responsible for distributing this money to affected customers.

If this does not work, you can contact the CFPB directly. The best place to start is with a phone call to the main number, which can help direct you to collection resources.

TD Bank’s Recent Charges

TD Bank’s legal woes continued when they plead guilty to money laundering and paid over $3 billion in penalties. On October 2024, TD Bank announced a resolution to its investigations regarding the U.S. Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) compliance programs. In agreement with the OCC, the Federal Reserve Board and the Financial Crimes Enforcement Network (FinCEN), it entered into plea agreements with the Department of Justice and the United States Attorney’s Office for the District of New Jersey.

Additionally, the Office of the Comptroller of the Currency (OCC) placed a $434 billion asset cap on the bank, severely limiting its regular business functions. Additional restrictions limited the opening of new branches, as well as dividend payments.

“Criminals were able to exploit our systems and our U.S. AML program did not deliver,” said Leo Salom, President and Chief Executive Officer of TD Bank. “We are committed to working productively with the Monitorship to build a sustainable AML program and meet our obligations under the terms of the resolution.”

What to Do If Your Bank Reports Incorrect Information

If you believe a bank has reported inaccurate information about your accounts—such as false delinquencies, fraudulent accounts or closed accounts listed as active—start by checking your credit reports. You can request free reports from Equifax, Experian and TransUnion at AnnualCreditReport.com.

Be sure to review each report for unfamiliar accounts, incorrect balances or dates that do not match your records. If you spot errors, file a dispute directly with the credit bureau that issued the report. Include documentation that supports your claim, such as account statements or letters from the bank.

You should also notify the bank in writing and request that it correct the inaccurate data. Under the Fair Credit Reporting Act, banks must investigate disputes and respond within 30 days.

If the issue is not resolved, you can file a complaint with the Consumer Financial Protection Bureau (CFPB) at consumerfinance.gov or by calling (855) 411-2372. You may also consider working with a financial advisor or credit counselor who can help you track your credit, manage disputes and protect your financial health going forward.

Bottom Line

In 2024, TD Bank was ordered to pay out $7.76 million to customers. In response, TD Bank entered into a consent order with the Consumer Financial Protection Bureau, agreeing to pay approximately $28 million in fines and restitution for knowingly misreporting information about its customers to credit agencies for several years. Continued troubles have affected TD Bank’s U.S. business, leading many customers to look elsewhere for their banking needs. If you think you may have been affected, be sure to check your credit report and contact both the bank and the CFPB immediately for a resolution.

Consider consulting a financial advisor who can help you stay on top of changes to your finances and address them accordingly.

Tips On Monitoring Your Credit

It really is essential that you stay on top of your credit score. Mistakes are common, and reporting agencies are slow to respond. This means that it’s up to you to monitor this very important number.
A financial advisor can help you build a comprehensive retirement plan. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Keep an emergency fund on hand in case you run into unexpected expenses. An emergency fund should be liquid — in an account that isn’t at risk of significant fluctuation like the stock market. The tradeoff is that the value of liquid cash can be eroded by inflation. But a high-interest account allows you to earn compound interest. Compare savings accounts from these banks.
Are you a financial advisor looking to grow your business? SmartAsset AMP helps advisors connect with leads and offers marketing automation solutions so you can spend more time making conversions. Learn more about SmartAsset AMP.