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TD Bank Hit with Class Action Over Excessive 'Sustained' Overdraft Fees

A proposed class action out of New Jersey claims TD Bank, N.A. unlawfully deducts an additional fee—on top of an initial $35 overdraft fee—when customers’ overdraft status remains in effect for longer than 10 days. The lawsuit argues the collection of this additional fee, which TD Bank calls a “sustained fee for overdrawn accounts,” constitutes interest for the use, forbearance, or detention of customers’ money and far exceeds what is allowed under the National Bank Act.

The 14-page complaint, filed in New Jersey district court by a Connecticut woman, presents a hypothetical scenario in which the bank’s sustained overdrawn accounts fee would go into effect: 

“If Customer ‘A’ were to overdraft his or her account by $50.00, the bank first charges an overdraft fee of $35.00 per transaction. However, if Customer A fails to replenish his or her account to bring the balance to a positive figure within 10 days, then the bank deducts yet another $20.00, as provided for in TD Bank’s Personal Fee Schedule, from the account of Customer A for having extended this credit.”

The sustained fee for overdrawn accounts is, in reality, an illegal interest rate based solely on customers’ alleged indebtedness to the bank, charged even though “the bank has provided nothing new in the way of services,” according to the lawsuit.  

The suit takes issue with a provision in the defendant’s Personal Deposit Agreement, in which the plaintiff claims there is no disclosure that TD Bank will charge what amounts to interest on customers’ extended credit.

The proposed class for the suit covers all TD Bank checking and/or money market account holders in the U.S. who, within the last two years, incurred extended overdrawn balance charges. 

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