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Federal Court Dismisses Part of CFPB’s Case Against TCF National Bank

On September 8, 2017, the U.S. District Court for the District of Minnesota entered an order granting in part and denying in part a motion to dismiss claims brought by the CFPB against TCF National Bank (“TCF”) for alleged wrongdoing in connection with offering overdraft services.

Brought in January, the case centered on allegations that TCF, in the course of obtaining customer consent for enrollment in overdraft protection services, violated opt-in and disclosure requirements under Regulation E and engaged in abusive and deceptive practices in violation of Dodd-Frank’s UDAAP provisions.

The court dismissed the CFPB’s Regulation E claims relating to the overdraft notice and opt-in requirements, finding that TCF had complied with the regulation’s specific, “surgical” requirements. The court also dismissed the CFPB’s UDAAP claims insofar as they related to conduct predating the agency’s effective date of July 21, 2011. The Bureau made only a cursory attempt to justify including conduct prior to July 21, 2011. The court understood the pre–July 21, 2011, allegations as based on a continuing-violation theory that, if upheld, would sweep in all prior practices simply because there was some violation after the effective date.

Notably, despite the bank’s technical compliance with the Regulation E overdraft notice and opt-in requirements, the court found that the Bureau had stated a claim against TCF for abusive and deceptive conduct after July 21, 2011, in relation to its opt-in practices. The ruling demonstrates that strict compliance with detailed regulations governing particular activities, such as the Regulation E overdraft notice and opt-in requirements, may still run afoul of Dodd-Frank’s amorphous, blanket UDAAP prohibition.

© 2020 Covington & Burling LLPNational Law Review, Volume VII, Number 263


About this Author

Luis Urbina, Covington Law Firm, regulatory and public policy lawyer

Luis Urbina advises clients on state and federal financial regulations. He assists banks, lenders, and technology companies with regulatory issues including bank chartering and compliance with consumer protection laws. He monitors developments regarding the Consumer Financial Protection Bureau (CFPB) and regarding the deployment of fintech services, including those dependent on blockchain technology.