Lawsuit: TD Bank Reaps Overdraft Fees from Ride-Share Transactions Governed by Account Overdraw Rules

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A New Jersey woman has filed a proposed class action lawsuit in which she alleges TD Bank, N.A. unlawfully collects overdraft fees from customers who opt out of the bank’s non-recurring debit transactions program, which allows the bank to authorize one-time debits when there is not enough money in the account to cover the transaction. 

The 28-page lawsuit begins by explaining TD Bank promises customers who do not opt in to its Debit Card Advance Program that it will decline non-recurring debit card transactions that will lower a consumer’s account balance below zero. Such transactions, the lawsuit says, will not be subject to overdraft fees because they will not be approved by TD Bank.

The plaintiff alleges that TD has, in effect, allowed itself an exception to its Debit Card Advance Program, namely transactions for ride-sharing services like Uber and Lyft. From the lawsuit: 

“But as to one very significant type of business, one for which it handles literally millions of transactions each month, TD Bank has decided to accept such transactions, and charge related overdraft fees, even though customers have not opted into Debit Card Advance. This business is ride-sharing, namely Uber Technologies, Inc. (‘Uber’) and Lyft, Inc. (‘Lyft’) rides.”

 By their very nature, the complaint reads, rides with Uber or Lyft are one-time, non-recurring transactions, which TD Bank allegedly approves regardless of a customer’s opt-in status.

 The plaintiff claims to have come across TD Bank’s alleged self-created loophole in March 2016 when she was charged two $35 overdraft fees after using her debit card to pay for rides that overdrew her account “even though such fees are only authorized under the TD Bank Agreements for ‘recurring’ debit card transactions.”