CFPB Charges TD Bank $28 Million for FCRA Violation
Written by: Heather Papows, Senior Loan Servicing & Secondary Market Consultant
Earlier this month, the CFPB announced an enforcement action as result of an investigation into TD Bank that unearthed several years of history where the Bank repeatedly provided inaccurate information to consumer reporting companies. The information contained “systemic errors about personal bankruptcies and credit card delinquencies” as well as information it “knew or suspected was fraudulent”. TD Bank allegedly knew of many inaccuracies for over a year before resolving them, and “failed to conduct proper investigations (or) any investigation at all” when faced with credit reporting disputes from customers or reporting agencies, a direct violation of the Fair Credit Reporting Act and the Consumer Financial Protection Act.
The harm caused by TD Bank’s actions (or lack thereof) were summarized as follows:
Failing to fix its credit card reporting errors: TD Bank reported inaccurate information about its customers’ credit card accounts despite knowing the information was incorrect.
Sharing fraudulent information with consumer reporting companies: Despite identifying an affected parties list, TD Bank continued to share inaccurate or fraudulent derogatory data with consumer reporting companies.
Failing to investigate and resolve consumer disputes: TD Bank did not have sufficient processes in place to investigate consumer reporting disputes and in some cases actively avoided investigating disputes.
Under authority laid out in the Consumer Financial Protection Act, the CFPB acted in response to the Bank’s violations of the Fair Credit Reporting Act and its implementing regulation, Regulation V, and for engaging in unfair, deceptive, or abusive acts or practices. The CFPB will require TD Bank to:
Pay redress to affected consumers: TD Bank must pay $7.76 million in redress to the tens of thousands of consumers affected by its unlawful behavior.
Pay a $20 million penalty: TD Bank will pay $20 million to the CFPB victim relief fund.
While the investigation reveals TD Bank’s significant problems with credit reporting and dispute resolution, it underscores the critical need for Bank controls that can ensure accurate data reporting to prevent or identify existing errors, even unintentional ones. Effective policies, procedures, and trained staff are essential for any servicing operation to monitor and address these issues.
For help reviewing your policies, procedures, and internal controls around FCRA and credit reporting dispute management, contact our Director, Bill Dolan at wdolan@scapartnering.com or by phone at (617) 694-2617.
