Federal watchdog sues TCF Financial over overdraft fees

WASHINGTON — Federal consumer finance regulators said Thursday they were suing TCF Financial Corp., alleging the bank deceived consumers so it could charge them exorbitant overdraft fees.

Banks’ overdraft fee tactics have long been considered predatory by consumer advocates. Such fees, which are charged when customers overspend their bank accounts, largely fall upon lower-income account holders.

Running as much as $35 per overdraft, the fees comprised a $180 million per year income stream for TCF, a bank with $21 billion in assets and with 360 branches in eight states. By law, customers must actively choose to enroll in overdraft programs before they can be charged overdraft fees. But to maximize its profits, TCF was accused of tricking customers into believing that overdraft features were a mandatory part of their checking account.

“TCF bulldozed its way through protections against automatic overdraft enrollment,” Consumer Financial Protection Bureau Director Richard Cordray said in a statement.

A bank spokesman, Mark Goldman, said the bank intended to vigorously defend itself in court. “We believe we have strong, principled defenses to its complaint,” Goldman wrote in an email to the AP.

To persuade customers to sign up for its overdraft coverage programs, the CFPB alleged, the bank also misled its customers about the costs of overdrafts and incentivized its staff to recruit customers with aggressive sales tactics.