CFPB Reaches $30M Settlement With TCF National Bank

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BCFP Office SignBureau of Consumer Financial Protection offices in Washington, D.C. Photo: C. Ryan Barber/ALM

TCF National Bank has agreed to pay $30 million to resolve allegations that it misled consumers about overdraft services, a year-and-a-half after the Consumer Financial Protection Bureau sued the bank in federal court amid a frenzy of enforcement activity leading up to President Donald Trump’s inauguration.

The settlement marked the CFPB’s first in a pending court case under the tenure of the agency’s Trump-appointed interim leader, Mick Mulvaney, who has criticized past enforcement actions for “pushing the envelope.”

Under the terms of the settlement, which still requires the approval of a Minnesota federal judge, TCF National Bank will pay $25 million in restitution to consumers who were charged overdraft fees, along with a $5 million penalty that will be roughly split between the CFPB and the Office of the Comptroller of the Currency.

The bank neither admitted nor denied the CFPB’s allegations, according to the proposed settlement submitted Friday in the U.S. District Court for the District of Minnesota.

Between February and September of last year, TCF National Bank’s defense team in the case included Eric Blankenstein, at the time an associate at Williams & Connolly, who joined the CFPB late last year as a top adviser for Mulvaney. Blankenstein now oversees the CFPB’s enforcement efforts as a policy associate director.

A CFPB spokesman confirmed that Blankenstein was recused from the case, saying he “had no engagement in the resolution.”

In addition to Williams & Connolly, TCF National Bank was represented by Buckley Sandler LLP, Dykema Gossett PLLC. The bank could not immediately be reached for comment Friday.

The CFPB announced the settlement Friday a press release. In January 2017, under the leadership of former CFPB Director Richard Cordray, the bureau announced its lawsuit with extensive details about how TCF National Bank relied on fee revenue from overdraft services “to a greater degree than most other banks its size.” The 2017 announcement of the lawsuit also included a colorful quote in which the bureau’s former leader accused the bank of “tricking consumers into costly overdraft services in order to preserve its bottom line.”

“‎TCF bulldozed its way through protections against automatic overdraft enrollment and then celebrated its unusual sign-up success,” Cordray said in a prepared statement. “With today’s action, we are standing up for consumers’ right to understand and choose what services they receive.”

The CFPB accused TCF National Bank of obscuring the true cost of overdraft fees and also duping consumes into believing that it was mandatory to sign up for overdraft services. The bank also ran a campaign to convince existing customers to opt into receiving overdraft services, according to the CFPB.