$2.25M TD Bank settlement announced over unsecured card upgrades

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Update: 

• TD Bank agreed to a $2.25 million settlement with two consumers who say they were each misled when they applied for a secured TD Bank credit card.
• On Aug. 29, a New Jersey federal judge gave her initial approval to the settlement, which would compensate about 123,000 credit card holders about $10 each. 
• Natalie Campagna of New York and Gloria DeVault of New Jersey claimed TD Bank led them to believe that if they opened secured credit card accounts and kept them in good standing for seven months, they would be able to convert the accounts to unsecured ones. 
• They reportedly fulfilled TD Bank’s requirements, but the bank failed to hold up its end of the bargain.
• U.S. District Judge Karen M. Williams said in her order that the settlement “appears to be fair, adequate and reasonable to the settlement class.”

(Dec. 10, 2020)

Two consumers who say they were each misled when they applied for a secured TD Bank credit card have filed a class action lawsuit against the bank.

Natalie Campagna of New York and Gloria DeVault of New Jersey claim TD Bank led them to believe that if they opened secured credit card accounts and kept them in good standing for seven months, they would be able to convert the accounts to unsecured ones. They reportedly fulfilled TD Bank’s requirements, but the bank failed to hold up its end of the bargain.

A secured credit card is one that is backed by the collateral of a cash deposit, which serves as a kind of insurance policy to cover charges if and when the cardholder defaults on making payments. Consumers who are looking to improve their credit scores, or who need to establish a credit history, often choose secured credit cards.

TD Bank requires customers to deposit money into a TD Bank savings account within 15 days of being issued a secured credit card, the plaintiffs say.

According to the federal class action lawsuit, the process to convert a secured TD Bank credit card to an unsecured one is two years, not the seven months it promises in its credit card promotions. The case was submitted to the U.S. District Court for the District of New Jersey.

Campagna and DeVault allege TD Bank’s actions are in violation of Delaware’s Consumer Fraud Act, New York’s General Business Law, and the New Jersey Consumer Fraud Act and are an act of breach of contract.

They are asking the court to certify the case as a class action lawsuit and to permit them to represent other TD Bank customers who have similarly opened security credit card accounts on the understanding they could convert them to unsecured accounts in seven months.

It is not yet known how many potential Class Members exist, but Campagna and DeVault’s lawyers told the court there are thousands.

The TD Bank credit card agreement states that if a secured credit cardholder uses and maintains the account for seven consecutive billing cycles “without committing an act of default,” the cardholder “may be eligible to graduate to an unsecured TD Bank credit card automatically,” the Campagna and DeVault class action says. The same terms appear on a promotional page on the TD Bank website, referring to the transition from a secured to an unsecured card as “graduating.”

Graduation to an unsecured credit card would allow the cardholder to withdraw the security deposit and recoup some of the fees paid to open the account, according to the plaintiffs.

Elsewhere on the bank’s website, in “a much less prominent location,” the company discloses that secured credit cardholders have to wait two years to have their accounts graduate to unsecured, Campagna and DeVault say.

That notice specifically says, “upon receipt of your application, we will review your TD Secured Credit Card account to ensure it has been open and in good standing for at least 24 consecutive billing cycles,” the class action says.

Regardless, the plaintiff’s lawyers are arguing that online notice cannot and does not supersede the official secured TD Bank credit card agreement.

“TD Bank’s scheme robs consumers of several of the benefits of the bargain,” the class action lawsuit alleges. “This practice also gives TD Bank an unfair advantage over competitors, which do not promise to upgrade accounts in seven months, and therefore lose business to TD.”

Campagna and DeVault both say their applications to have their secured TD Bank credit cards graduate to unsecured status, after seven months of keeping the accounts in good standing, were denied.

When Campagna called the credit card’s customer service department to protest, she says she was told “consumers are always calling in and requesting graduation,” but that “the process takes far longer than seven months and hardly anyone ever graduates.”

Do you have a secured TD Bank credit card? Have you been waiting more than seven months for the bank’s approval to transition to an unsecured credit card? Tell us about it in the comment section below.

Campagna and DeVault and the proposed Class Members are represented by Kenneth J. Grunfeld of Golomb & Honik PC and E. Adam Webb, Matthew C. Klase, and G. Franklin Lemond Jr. of Webb, Klase, Lemond, LLC.

The TD Bank Credit Card Class Action Lawsuit is Natalie Campagna, et al. v. TD Bank, N.A., Case No. 1:20-cv-18533, in the U.S. District Court for the District of New Jersey, Camden Division.

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