Bank Regulation

TCF Bank Sees Partial Ruling In Its Favor In Overdraft Fees Case Lodged by CFPB

Late last week, regional bank TCF Financial Corporation saw a judge dismiss some of the claims lodged against it by the Consumer Financial Protection Bureau.

According to a news report in American Banker, a Minnesota district court judge threw out the government watchdog’s claims that the company violated Regulation E. The rule, which was put on the books by the Federal Reserve, requires banks to get permission from customers before giving them overdraft protection. While that claim was tossed out, the judge left alone other claims by the CFPB that TCF Bank violated the Dodd-Frank Act, which prevents companies from engaging in unfair and deceptive practices when involved with selling products to consumers, noted the report. The judge said the CFPB can’t asset claims prior to July 21, 2011, but denied the motion put forth by TCF to dismiss claims that happened after that date, according to American Banker.

In January, TCF was sued by the CFPB, which contends the bank tricked consumers into overdraft services that were very costly. In a press release announcing the action, the government watchdog said banks aren’t allowed to charge overdraft fees on one-time debit purchases or ATM withdrawals without getting consumer consent, but that TCF created its application process in a way that obscures the fees and makes an overdraft appear to be mandatory.

The CFPB also contends that TCF embraced a “loose” definition of consent for their existing customers to opt them into the overdraft service. Customers who questioned the process reportedly received push-back from the bank. “Today we are suing TCF for tricking consumers into costly overdraft services in order to preserve its bottom line,” said Richard Cordray, director of the CFPB, in a press release announcing the lawsuit. “TCF bulldozed its way through protections against automatic overdraft enrollment and then celebrated its unusual sign-up success. With today’s action, we are standing up for consumers’ right to understand and choose what services they receive.”


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.