TD Bank Failed to Warn Zelle Users of Overdraft Fee Risk, Class Action Claims

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A proposed class action claims that TD Bank has failed to warn customers that using the Zelle money transfer service comes with an “extreme and undisclosed risk of expensive bank fees.”

The 25-page lawsuit says that although TD Bank touts Zelle as convenient, simple and “totally free,” the bank makes no mention of the fact that overdraft and insufficient funds (NSF) fees are a “likely and devastating consequence” of using the service.

“These risks are known to TD Bank but is [sic] omitted from all of its marketing,” the complaint contends. “Had Plaintiff and the Class members known of the true operation and risks of the Zelle service—risks TD Bank alone was aware of and actively misrepresented—they would not have signed up for and used the Zelle service.”

According to the case, TD Bank advertises Zelle, a network operated by the seven largest banks in the U.S., as a money transfer service that “won’t cost you any extra money for the transaction.” Based on the bank’s representations, accountholders do not expect that they will incur “extreme and crushing” overdraft and NSF fees as a result of using the service, the lawsuit argues.

What TD Bank fails to disclose to customers is that Zelle has a credit feature that allows a user to initiate a money transfer even when their account does not contain enough funds to cover the transaction, according to the complaint. Per the suit, consumers are unaware that TD Bank may allow a Zelle transfer to occur despite there being insufficient funds in an account, and essentially loan the accountholder the funds to execute the transfer.

According to the case, these loans come at a “very expensive” cost given the bank charges overdraft or NSF fees on such transactions.

The lawsuit argues that TD Bank customers have no idea that using the Zelle service comes with “these damaging risks” and would not have signed up for or used Zelle had they been properly informed of the potential for overdraft and NSF fees.

The plaintiff, a Miami-Dade County, Florida resident, says he incurred at least two $35 overdraft/NSF fees as a result of using Zelle to transfer money from his account through the TD Bank app.

The lawsuit looks to represent TD Bank accountholders who used the Zelle service and incurred overdraft or NSF fees as a result of a Zelle transaction on their account.

Initially filed in Miami-Dade County Circuit Court on April 13, 2022, the lawsuit was removed to Florida’s Southern District Court on June 3.

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