in Newswire Published on December 14, 2020

‘Bait-and-Switch’: TD Bank ‘Refuses’ to Allow Secured Credit Card Holders to ‘Graduate’ to Unsecured Cards, Lawsuit Says [UPDATE]

Last Updated on February 22, 2023

Campagna et al. v. TD Bank, N.A.

Filed: December 8, 2020 ◆§ 1:20-cv-18533

A class action alleges TD Bank has pulled a "bait-and-switch" on secured credit card holders by failing to adequately disclose that it'll take longer than seven billing cycles to "graduate" to an unsecured card.

Defendant(s)

TD Bank N.A.

Law(s)

New York General Business Law New Jersey Consumer Fraud Act Delaware Consumer Fraud Act

State(s)

New Jersey

February 22, 2023 – Official TD Bank Secured Credit Card Settlement Website Is Live

The official website for the $2.25 million TD Bank secured credit card settlement is live and can be found at tdbanksecuredcardclassaction.com.

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According to the website, consumers may be eligible to receive a base award of $10 if they opened a TD Cash Secured Credit Card between May 20, 2015 and January 18, 2022 and maintained their account for seven consecutive billing cycles through August 29, 2022 without committing an act of default but were not graduated to an unsecured TD Bank credit card in the cycle following that seven-month period.

Per the site, if any money is left over in the settlement fund after initial payments, attorney fees and service awards are distributed, class members may receive an additional payment based on how long they were, or have been, in the secured card since the seven-month period without default.

If you are entitled to money from the settlement, you do not have to do anything to receive it, the website states. If and when the court approves the settlement, and after any appeals are resolved, a check will automatically be mailed to consumers covered by the deal at the address they maintain(ed) with TD Bank. The site urges consumers to remain patient as resolving appeals can take time.

The final approval hearing for this settlement is set to take place on February 23, 2023.

To update your mailing or email address, head to this page and enter the 10-character Unique ID and four-digit PIN you received in the email or mailed notice of this settlement. If you did not receive a notice of the settlement but believe you should have, contact the settlement administrator here.

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Case Update

September 2, 2022 – TD Bank Agrees to $2.25M Settlement of Secured Credit Card Lawsuit

TD Bank has agreed to settle the claims detailed on this page in a $2.25 million deal that looks to provide cash payments to the bank’s secured credit card holders.

The settlement, which received a judge’s preliminary approval on August 29, will cover current and former holders of a TD Bank cash secured credit card who opened their card between May 19, 2015 and January 18, 2022 and maintained their account for seven consecutive billing cycles without committing an act of default yet were not graduated to an unsecured TD Bank credit card in the cycle following that seven-month period.

According to court documents, the settlement will cover about 123,000 people. Each person will receive a base payment of $10, plus an additional amount depending on how long their card was in an ungraduated state.

The settlement agreement notes that payments may be reduced or increased depending on a number of factors, including the costs of administering the settlement and attorneys’ fees.

Now that the deal has been approved, covered card holders should expect to receive an email with more information, or a mailed letter if TD Bank does not have their email address on file. The bank will be asked to provide the contact details for those covered by the deal, and that information will be checked against a change of address database before notice is sent out.

An official settlement website will also be set up where people will be able to find more information about the deal.

The judge overseeing the litigation has scheduled a final approval hearing for February 23, 2023.

Don’t miss out on settlement news like this. Sign up for ClassAction.org’s free weekly newsletter here.

A proposed class action alleges TD Bank has violated its contracts with secured credit card holders by refusing to allow them to “graduate” to an unsecured card, even if they remain in good standing for the required seven consecutive billing cycles.

The 22-page lawsuit claims TD’s own contractual documents reveal the bank has pulled “a classic bait-and-switch scheme” on card holders such as the plaintiffs, who are not made aware upon initially signing up for a secured credit card that there exists a two-year waiting period before they can effectively level up.

“This two-year waiting period is spelled out in a much less prominent location on the Bank’s website,” the complaint, filed in New Jersey federal court, reads, alleging TD has gained an unfair competitive advantage by luring customers away from “other, better credit card options.”

According to the 22-page lawsuit, TD Bank offers a secured credit card to customers who need to build or rebuild their credit score. The card requires the payment of a security deposit, which TD holds as collateral in a savings account to “secure” the credit line for the card, the case says. Those who apply for and are issued a TD secured card are also required by the bank to open a TD Simple Savings Account to hold their security deposit, and are given 15 days to deposit the funds into the account, the suit adds.

In effect, TD, as the issuer of the secured credit card, incurs no risk because funds are available in the customer’s savings account up to the amount of the credit limit on the card, the lawsuit says.

In its contractual documents and online, TD relays that secured credit card users who keep the card in good standing for seven straight billing cycles can “graduate” to an unsecured card, the suit states. Per the case, “graduation” to an unsecured TD credit card means a consumer will regain control of the funds held in security in the TD Simple Savings account and be entitled to a prorated refund of the annual fee they were charged for their secured credit card, among other benefits.

According to the lawsuit, however, TD Bank refuses to allow customers to “graduate” from a secured to unsecured credit card, even if they’re able to keep the card in good standing for seven consecutive billing cycles. The case says the plaintiffs came to learn after seven months of secured credit card use that the process of graduating to an unsecured card in fact takes “far longer,” and that “hardly anyone ever graduates due to the lengthy process involving many outside factors.”

As the suit tells it, TD Bank’s handlings of the plaintiffs’ secured cards are “not isolated events,” as many customers call the bank with the same concerns before coming to learn it may be a long while before they can receive an unsecured credit card.

Despite the fact that TD’s card agreement clearly establishes that a customer can “graduate” to an unsecured card following seven consecutive billing cycles, buried deep in the defendant’s website is the following disclosure geared toward those who already have a TD secured credit card:

“Upon receipt of your application, we will review your TD Secured Credit Card account to ensure it has been open and in good standing for at least 24 consecutive billing cycles. We will then review your application in its entirety to determine your creditworthiness in accordance with our standard procedures for review of unsecured personal credit card applications, including, but not limited to, obtaining a credit report to determine your eligibility.”

Because this webpage is aimed at those who already have a TD secured card, but want to apply for an unsecured credit card, it is not crafted for those looking to apply for a card initially, the lawsuit clarifies. According to the complaint, this separate online disclosure “cannot trump the Card agreement,” which states that the contract “replaces any other agreement relating to your Credit Card Account that you and we made earlier or at the same time.”

The case says TD’s conduct results in the bank continuing to exercise control over customers’ collateral funds held in a Simple Savings Account while it refuses to refund the annual fee. Broadly, TD’s conduct when it comes to secured credit card holders “robs consumers of several of the benefits of the bargain,” the lawsuit alleges.

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