WASHINGTON, D.C. - The Consumer Financial Protection Bureau (CFPB) today ordered TD Bank to pay $28 million in penalties and consumer redress for sharing inaccurate information with credit reporting companies. This practice, which involved errors related to credit card delinquencies and suspected fraudulent accounts, potentially impacted tens of thousands of consumers' access to credit and employment.
TD Bank, a subsidiary of Toronto-Dominion Bank (NYSE: TD), reportedly failed to correct these inaccuracies promptly, despite being aware of the issues. The bank also inadequately investigated and resolved consumer disputes regarding the reporting errors. The CFPB's enforcement action includes a $7.76 million payment to affected consumers and a $20 million civil money penalty.
The erroneous reporting by TD Bank, which has over 1,200 branches in the United States and reported approximately $3.7 billion in total assets as of June 30, 2024, violated the Fair Credit Reporting Act and the Consumer Financial Protection Act. The CFPB found that TD Bank's actions were not only illegal but also demonstrated a lack of proper attention to correcting the reporting errors and investigating consumer disputes.
This penalty marks the second enforcement action against TD Bank by the CFPB, following a 2020 order that required the bank to pay restitution and penalties for illegal overdraft practices. This latest order compels TD Bank to pay the stipulated amounts to the CFPB's victims relief fund and directly to consumers affected by its unlawful behavior.
The CFPB's action underscores the importance of accurate credit reporting and the legal obligations financial institutions have to ensure the information they provide is correct. Consumers who have experienced issues with financial products and services can submit complaints via the CFPB's website or by calling their helpline.
The information for this article is based on a press release statement from the Consumer Financial Protection Bureau.
In other recent news, Toronto-Dominion Bank (TD Bank) reported consistent third-quarter earnings for fiscal year 2024, with revenue of $1.8 billion and earnings per share of $2.05. The bank allocated a $2.6 billion provision for potential fines related to ongoing anti-money laundering matters, anticipating a resolution by year-end. TD Bank's various sectors delivered mixed results, with Canadian Personal and Commercial Banking and U.S. Retail segments outperforming expectations, while Canadian Wealth & Insurance and Wholesale Banking divisions fell short.
National Bank Financial upgraded TD Bank shares from Underperform to Sector Perform and increased the stock price target to C$78.00, despite acknowledging uncertainties in the bank's long-term outlook in the United States. Meanwhile, BMO Capital maintained its Market Perform rating on TD Bank, with a steady price target of Cdn$84.00.
In a move to bolster capital, TD Bank sold approximately 40.5 million shares of Charles Schwab (NYSE:SCHW) Corporation, reducing its stake to 10.1%, and repurchased over 100 million shares. Despite these developments and mixed financial performance in different divisions, both BMO Capital and National Bank Financial saw no reason to adjust their ratings or price targets for the bank's shares. These recent developments reflect TD Bank Group's strategic moves to maintain growth and navigate complex regulatory environments, especially in the context of its U.S. operations.
InvestingPro Insights
In light of the CFPB's recent action against TD Bank, investors and customers may be looking for stability and reliability in the bank's financial performance. According to InvestingPro data, TD Bank boasts a market capitalization of $106.33 billion and has maintained a steady revenue growth, posting a 3.78% increase over the last twelve months as of Q3 2024. This growth is further evidenced by a 7.87% quarterly revenue increase in Q3 2024. Moreover, the bank has upheld a tradition of rewarding shareholders, with a dividend yield of 4.91% and a history of dividend growth, increasing its dividend by 4.4% in the same period.
InvestingPro Tips highlight that TD Bank has raised its dividend for 14 consecutive years, showcasing a commitment to returning value to shareholders even amidst operational challenges. Additionally, the bank is recognized as a prominent player in the Banks industry. For investors seeking more detailed analysis and financial foresight, there are additional InvestingPro Tips available, which can be explored for a comprehensive understanding of TD Bank's financial health and market position.
With the backdrop of the CFPB's findings, these metrics and tips from InvestingPro provide a broader context for evaluating TD Bank's performance and potential resilience in the face of regulatory challenges. For those interested in a deeper dive into TD Bank's financials and future outlook, further InvestingPro Tips can be accessed, offering valuable insights for making informed decisions.
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