TD Bank Seeks Final Approval of Frozen Account Class Action Settlement

A motion for final approval of a settlement agreement in a class action alleging TD Bank improperly froze customer accounts and imposed fees was filed in New York federal court.

Under the terms of the settlement, TD Bank will pay $500,000 to end the class action lawsuit alleging the bank froze customer accounts containing subsistence funds such as Social Security, veterans or disability benefits in violation of a New York State law called the Exempt Income Protection Act (EIPA).

Under the terms of the settlement, TD Bank will also make it easier for affected customers to access their funds through debit cards and ATMs.

“After nearly seven years of litigation in a case of first impression, with the motion for class certification pending, the parties have reached a class action settlement that provides substantial redress for class members,” the motion for final approval of the settlement states.

According to documentation filed with the court, those affected by an improper hold on their account will be entitled to $125 and refunds of any documented overdrafts, or if there is no proof of overdraft, $20. Additionally, the bank will be required to manually review affected accounts and pay account holders when exempt funds are found.

Class Members include “all TD Bank Account Holders who are or were judgment debtors under New York law and whose accounts containing [Exempt Income Protection Act] Exempt Funds were restrained.”

TD Bank also agreed to change the letter it uses to notify judgment debtors of their frozen accounts as changes under the settlement agreement are made.

“The Settlement will compensate all claiming Class Members for any fees charged by the Bank for processing restraints, as well as substantially change the manner in which the Bank administers restraints under EIPA,” said the motion. “The Settlement is fair, reasonable and adequate.”

The class action lawsuit alleged that TD improperly froze the accounts of those on Social Security or containing veterans or disability benefits when the customers became “judgment debtors.” As a result, said the plaintiffs, those with restrained accounts ended up overdrafting and being charged additional fees.

According to the class action, New York State law prevents banks from freezing bank accounts for creditors when the accounts contain “subsistence funds.” TD ignored state law, said the plaintiffs, and also failed to provide mandatory disclosures to those whose accounts were frozen.

According to the motion for final approval of the settlement, seven potential Class Members chose to opt out of the settlement agreement, while more than 1,300 submitted claims. “No class members objected to the settlement,” noted the motion.

Top Class Actions will post updates to this class action settlement as they become available. For the latest updates, keep checking TopClassActions.com or sign up for our free newsletter. You can also receive notifications when this article is updated by using your free Top Class Actions account and clicking the “Follow Article” button at the top of the post.

The Class is represented by G. Oliver Koppell and Daniel F. Schreck of the Law Offices of G. Oliver Koppell & Associates.

The TD Bank Frozen Account Class Action Lawsuit is Cruz v. TD Bank NA, Case No. 1:10­-cv-­08026, in the U.S. District Court for the Southern District of New York.