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While the government has implemented measures to tackle predatory lending practices among high-cost credit lenders, more needs to be done about the sky-high NSF fee charges by big banks. 

However, a recent class-action lawsuit against Toronto-Dominion Bank (TD) has brought up unfair and predatory NSF fee charges that lower-income individuals constantly battle. 

NSF fee charges by big banks are just another example of the cost of poverty. 

TD Bank NSF Settlement Case

The Ontario Superior Court of Justice has approved a class-action settlement, requiring Toronto Dominion Bank to pay nearly $16 million, resolving a case over non-sufficient funds (NSF) fees. NSF fees are charged by a bank or financial institution when an account does not have enough money to cover a transaction, such as a cheque or a pre-authorized payment. 

The TD class action lawsuit alleges that TD Bank was charging customers multiple NSF fees on a single declined payment or bounced cheque. 

The lawsuit argues that TD customers were not adequately informed about the possibility of incurring multiple NSF fees. According to the case, the lead plaintiff, Tyler Dufault, was charged $96 in NSF fees when he went into overdraft by 45 cents after paying a bill.

The settlement was reached in August 2023.

Will You Receive A Cut Of The TD Settlement? 

Current TD customers may be eligible to receive part of the TD settlement if they meet the following conditions: 

  • You have an active personal deposit account with TD.
  • You were charged an NSF fee on a pre-authorized debit transaction between Feb. 2, 2019, and Nov. 27, 2023.

Those eligible will receive a message on EasyWeb from TD Bank notifying them that they are eligible for compensation through the settlement. 

How Much Will You Receive Through the TD Settlement? 

According to the settlement agreement, TD customers who are eligible to receive part of the TD settlement may get about $88. 

Payments are expected to be distributed starting April 2024. 

How Do You Claim Part Of The TD Settlement?

You don’t have to sign up or file any paperwork to claim part of the settlement. If eligible, the money will be directly deposited into your TD account. 

Do note that you need to have your TD account open to receive the settlement payment. 

TD Settlement Shedding Light On Unfair And Predatory Practices: NSF Fees

The approved $15.9-million settlement against Toronto-Dominion Bank, addressing the issue of double-charging NSF fees without proper disclosure, highlights wider scrutiny and a federal push to lower such fees. 

As mentioned by Donna Borden, a leader of the advocacy group Acorn, large NSF fees are a predatory practice by big banks. This practice burdens many individuals, as evident in the 105,000 customers benefiting from the settlement. 

While TD does not admit liability, they have agreed to amend disclosures and allow a full fee reversal, emphasizing the need for banking transparency and regulation. 

In contrast, many U.S. banks have eliminated NSF fees under regulatory pressure. According to a CFPB report, the average cost of NSF transactions in the U.S. is minimal, likely less than US $0.005 each. The Canadian government, on the other hand, has adopted protection measures, like low-balance alerts to mirror efforts against “junk fees” like the U.S. However, Canada lags in eliminating such fees, with major banks like TD still maintaining them. On average, most Canadian banks charge a fee between $45 and $50.  

NSF Fees: How To Avoid Them

A non-sufficient fund (NSF) fee is a common fee charged by big banks and other financial institutions. An NSF fee is charged when you don’t have enough funds in your account to cover a cheque or transaction such as a pre-authorized bill.

Most banks charge between $40 and $50 per transaction with insufficient funds. This can add up quickly if you have multiple NSF fee charges. To help you avoid these NSF fees, consider the following: 

  • Overdraft Protection – For a small fee, you can get overdraft protection. This is an optional service that covers your transactions (up to a certain limit) when you don’t have enough funds in your bank account. If you’re someone who often goes into overdraft, this can save you a lot of money in NSF fees.
  • Set-Up Account Balance Alerts – Most banks offer users the ability to set up automatic alerts. These alerts will notify you when your account balance has reached a certain amount. That way you’ll know how much money you have left in your account and whether it’s enough to carry out future transactions.    

Final Thoughts

While TD Bank did not admit liability, the commitment to revise disclosures and policies underscores the imperative for enhanced transparency in banking practices. Emphasizing the need for comprehensive reforms within the Canadian banking sector to alleviate the financial burden on consumers.

Maidina Kadeer, BA avatar on Loans Canada
Maidina Kadeer, BA

Mai Kadeer is a graduate of Concordia University, with a BA in English Literature, with a minor in Law and Society. Mai was a student strategist on the Concordia University Senate (2016), through the Academic Planning and Priorities committee. She has a background in financial budgeting as a board member for non-profit organizations, such as the Quebec Public Interest Research Group and the Concordia Food Coalition. For the past five years, Maidina has worked as a content specialist. Mai is passionate about helping Canadian consumers with financial management and literacy so they can make informed decisions regarding their personal finance.

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