The Consumer Financial Protection Bureau (CFPB) has fined TD Bank $20 million for reporting inaccurate information on consumer credit reports, marking another major penalty for the bank following a $122 million fine in 2020 for illegal overdraft fees.

TD Bank $20M fine :Credit Report Violations

The CFPB's investigation revealed that TD Bank, a subsidiary of Canada’s Toronto-Dominion Bank, made systematic errors in reporting customers’ credit card delinquencies and bankruptcies. Additionally, the bank is required to pay $7.76 million in compensation to tens of thousands of customers who were negatively affected by the inaccurate information shared with consumer reporting agencies.

CFPB Director Rohit Chopra criticized TD Bank for not taking timely action to address the erroneous information. “The CFPB’s investigation found that TD Bank illegally threatened the consumer reports of its customers with fraudulent information and then barely lifted a finger to fix it,” Chopra said.

Bank Failures and Consumer Impact

The CFPB found that TD Bank not only reported inaccurate data about customers' credit card accounts but also failed to correct errors related to fraudulent bank accounts in a timely manner. In some cases, it took the bank over a year to address these issues, violating the Fair Credit Reporting Act and the Consumer Financial Protection Act. These errors affected thousands of customers who applied for credit, housing, or employment.

The investigation also revealed that TD Bank failed to act on hundreds of thousands of fraudulent account openings, continuing to report false information to credit agencies, further exacerbating the problem for affected customers.

Previous Penalties

This is not the first major penalty TD Bank has faced. In 2020, the CFPB imposed a $122 million fine on the bank for charging illegal overdraft fees and using deceptive practices to enroll customers in debit card overdraft services. Additionally, in August 2023, TD Bank set aside $2.6 billion to cover fines related to ongoing civil and criminal investigations into its compliance with anti-money laundering regulations.