A federal judge has upheld the Consumer Financial Protection Bureau’s charges against TCF Financial Corp. in regard to deceptive practices related to overdraft fees.
However, U.S. District Judge Paul Magnuson last week dismissed two of the bureau’s claims regarding TCF’s policies toward debit card and ATM transaction disclosures. He found that TCF followed all federal regulations regarding those practices.
Earlier this year, the bureau sued Wayzata-based TCF, claiming that the bank improperly enrolled thousands of customers into an opt-in program for service fees that cover overdrafts on their accounts. TCF has denied wrongdoing, saying it informs customers at least 20 times during the enrollment process that the fee is optional.
TCF had filed a motion to dismiss the entire case.
The claims in regard to the overdraft charges will proceed, although Magnuson narrowed the dates they cover to July 21, 2011, and after. TCF now has a deadline of Sept. 22 to respond to those charges.
“Our motion to dismiss the lawsuit was based on TCF’s belief that it is without merit,” said Amie Hoffner, vice president for corporate communications at TCF Financial Corp. “TCF appreciates the judge’s thoughtful consideration of our arguments. In particular, we are pleased that the court has dismissed the CFPB’s allegations of noncompliance with Regulation E” regarding the electronic transaction disclosures.
The Minnesota Bankers Association, joined by 13 other state banking associations representing a total of 2,500 banks, filed an amicus brief in the case supporting TCF’s motion to dismiss the case, focusing mainly on the electronic transfer regulation claims.
The judge cited the amicus brief in dismissing those regulation claims.
“We reached the conclusion that there were issues of significant importance to the entire industry. So we decided to jump in,” said Joe Witt, president and CEO of the Minnesota Bankers Association.
The narrowing of claims in the lawsuit increases the chance of a settlement. “In general we are always open to settlement discussions,” Hoffner said. “Although we can’t speculate as to whether this will result in such discussions.”