Feds sue TCF National Bank for overdraft fee policy

Posted by on Jan 23, 2017 in Questions and Answers | 0 comments

The Consumer Financial Protection Bureau (CFPB) has filed a lawsuit against TCF National Bank, alleging it tricked customers into agreeing to pay overdraft fees.

Under recent law, a bank cannot charge overdraft fees on debit purchases or ATM withdrawals unless the customer specifically agrees.

Until a recent change in the law, banks would cover the purchase but assess an overdraft fee for each transaction. The customer would not know that they were overdrawn, until it was too late.

Banks said that they were providing their customers a short-term loan. But customers said that they would rather have their purchase be declined and not have to pay a fee.

So the new law allows banks to charge the overdraft fees if the client agrees in advance. However, TCF National Bank, it is alleged, designed its application process to make it appear that customers had to accept “overdraft protection” when they opened their accounts.

“Today we are suing TCF for tricking consumers into costly overdraft services in order to preserve its bottom line,” said CFPB Director Richard Cordray.” The suit asks for compensation for affected customers, a civil money penalty and an injunction to prevent future violations.

The normal procedure when customers make a debit card purchase for which there is not enough money in their account is for the sale to be declined. That alerts the customer, and avoids expensive fees.

It should be noted the law on overdraft fees applies only to debit cards. It does not include checks.

It should also be noted that President Trump is not a fan of the CFPB or its Director Cordray. So in the future these customer protections may no longer exist. The banks will be allowed to do whatever they please to their customers. So much for “draining the swamp”.

If you need further info on this or any other legal matter, please call Attorney Linda Fessler at 213-446-6766 for a free consultation.

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