TD Bank, part of Canada’s TD Bank Group, has agreed to pay $122m to resolve a dispute related to its Debit Card Advance (DCA) optional overdraft service offered to US customers.

The US Consumer Financial Protection Bureau (CFPB) has accused TD Bank of charging customers fees on its overdraft service without their consent after saying it was free of charge.

TD Bank has agreed to pay $97m in restitution and $25m in civil penalties to resolve this dispute.

However, TD Bank denied wrongdoing in the matter.

The settlement relates to about 1.5 million customers who enrolled in the service between 2014 and 2018.

TD Bank president and CEO Greg Braca stated: “Throughout the period in question, TD had a clear process to secure formal consent before providing this service to customers, enabling them to make an informed and conscious choice.

“Prior to this settlement, TD had already voluntarily and proactively implemented enhancements to our Debit Card Advance disclosure and enrolment processes beginning in 2014.

“Although we disagree with the CFPB’s conclusions, we have cooperated fully to resolve this matter and are moving forward with a continued focus on meeting the needs of our customers.”

The DCA overdraft service covers ATM and one-time debit card transaction fees for enrolled customers.

It is said to be a reliable source of short-term liquidity that helps customers avoid declined transactions due to insufficient funds.

TD Bank said that it alerts the customers whenever overdrafts occur and also provides suggestions for managing their accounts and avoiding future overdrafts.