TD Bank to pay $16 million to settle insufficient funds class-action lawsuit
TORONTO — The high cost of not having enough money is being brought into focus by a class-action lawsuit at one of the country’s largest banks.
Court documents in the case against Toronto-Dominion Bank included a stark example from lead plaintiff Tyler Dufault, who was charged $96 in fees by the bank after he fell 45 cents short on a PayPal bill.
A $15.9-million settlement of the suit, which focused on whether the bank had properly disclosed that customers could be twice charged the $48 non-sufficient funds (NSF) fee, was approved this week by the Ontario Superior Court.
The settlement comes as scrutiny grows more generally on the charging of such fees, including a push to lower them by the federal government.
In the United States, many banks have already moved to eliminate the fees thanks to pressure from regulators, while in Canada advocates are also pushing to reduce them or do away with them entirely.
“This is just another predatory practice of the banks, to charge such a large amount of money,” said Donna Borden, a leader at anti-poverty advocacy group Acorn.
Big banks in Canada charge between $45 and $50 when there isn’t enough money in the account to process a pre-authorized debit such as an automatic bill payment. If the transaction is rejected, merchants are allowed to try to put it through a second time within 30 days.
TD, which didn’t admit any liability in the settlement, agreed as part of the terms that it would amend its disclosures, and would also change its policy to allow for a full reversal of the fee for a first-time issue raised by a customer.
It maintains that it’s not clear to the bank if it is facing the same charge a second time or a new purchase.
“Each payment instruction is a unique
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