TD Bank, N.A. faces a proposed class action over its alleged practice of charging both an overdraft fee and an insufficient funds (NSF) fee on a single transaction.
Per the lawsuit, TD Bank violated the terms of its account documents by charging more than one fee on a single item despite promising to charge either a single $35 NSF fee or a single $35 overdraft fee per item.
“Until very recently, TD Bank’s Account Documents never disclosed that the Bank undertakes these practices,” the complaint alleges. “To the contrary, the Bank’s Account Documents indicated that TD Bank would charge only a single fee on an item.”
The lawsuit says TD Bank’s personal deposit account agreement and personal fee schedule make “explicit promises and representations” regarding how transactions will be processed and when NSF or overdraft fees will be assessed. According to the suit, TD Bank specifies that when the bank returns an item for insufficient funds, it will assess a $35 NSF fee per item, and when the bank pays an item despite insufficient funds, a $35 overdraft fee will be assessed per item. An “item,” the case explains, is a request for payment by an account holder and does not become a new item if it is reprocessed by the bank.
The lawsuit claims, however, that TD Bank has a practice of rejecting an item for payment and charging an NSF fee before then reprocessing the same item days later and charging an overdraft fee. This sometimes happens more than once, the case alleges.
“Oftentimes, TD Bank does this multiple times—repeatedly rejecting, reprocessing, and charging one or more NSF Fees on the transaction before finally authorizing it and then charging an additional OD Fee on that item,” the complaint charges.
The case argues that a transaction cannot become a new “item” each time it is reprocessed for payment given that it is “simply another attempt to effectuate [the customer’s] original order or instruction.” Per the suit, TD Bank’s account documents never specify a situation in which the bank may charge one or more NSF fees and an overdraft fee on a single check or ACH transaction that was initially returned and later reprocessed.
It was only in April 2021 that TD Bank added the following language to its definition of “item,” allowing the bank to charge additional fees on resubmitted items, the suit says:
“In the event that there are insufficient funds in your account to pay an item and the transaction is resubmitted, each resubmission constitutes a separate item.”
Per the case, a reasonable consumer would understand that any authorization for payment constitutes a single item as the term was used in the bank’s account documents prior to April 2021.
The lawsuit, which was recently removed from Broward County, Florida Circuit Court to the state’s Southern District Court, looks to cover TD Bank checking account holders in the U.S. who, during the applicable statute of limitations and until April 1, 2021, were charged an NSF fee and an overdraft fee on the same item.
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