On January 19, the CFPB filed a lawsuit against TCF National Bank for “tricking consumers into costly overdraft services.” The CFPB’s complaint alleges that TCF violated Regulation E and the Consumer Financial Protection Act.

TCF National Bank is headquartered in Wayzata, Minnesota and operates 376 retail branches in Arizona, Colorado, Illinois, Indiana, Michigan, Minnesota, South Dakota, and Wisconsin.

According to the CFPB’s press release , TCF designed its application process to “obscure the fees and make overdraft seem mandatory for new customers to open an account.” Much like other financial institutions, TCF’s overdraft program charges an average of $35 for each occasion a customer overdrafts their account by spending or withdrawing more money than is available at that time. Although TCF’s overdraft charges are comparable to industry standards, it is the bank’s deceptive disclosure and opt-in practices that landed it in hot water with the CFPB.

Under federal law, banks are prohibited from charging overdraft fees on one-time debit card transactions and ATM withdrawals without a consumer’s affirmatively consent. The CFPB’s complaint alleges the following:

TCF misled customers by suggesting that optional overdraft was mandatory: TCF determined through customer testing that if new customers were asked to opt-in to overdraft protection at the same time as they were being asked to agree to other mandatory terms, more than twice as many consumers would opt-in. As such, TCF deliberately placed the opt-in decision immediately following a series of mandatory items that the customer must agree to in order to open a new account. TCF even distributed scripts to branch employees that did intentionally obscured whether or not the overdraft program was optional, or that opting in granted permission to the bank to authorize transactions that would result in overdraft fees.

TCF determined through customer testing that if new customers were asked to opt-in to overdraft protection at the same time as they were being asked to agree to other mandatory terms, more than twice as many consumers would opt-in. As such, TCF deliberately placed the opt-in decision immediately following a series of mandatory items that the customer must agree to in order to open a new account. TCF even distributed scripts to branch employees that did intentionally obscured whether or not the overdraft program was optional, or that opting in granted permission to the bank to authorize transactions that would result in overdraft fees. TCF misled customers in order to obtain opt-in consent: TCF launched a campaign to persuade current customers to opt-in to overdraft services. TCF provided scripts to branch employees and instead of asking whether customers wanted to have their overdrafts covered for a $35 charge, the scripts instructed employees to ask customers if they wanted their “TCF Check Card to continue to work as it does today?” TCF considered a response of “yes” to mean that the customer had agreed to opt-in to the overdraft program. The CFPB alleges that “many consumers did not understand that by choosing to have their debit card ‘continue to work as it does today,’ they were granting the bank permission to authorize transactions and charge them overdraft fees that they would otherwise not have to pay.”

TCF launched a campaign to persuade current customers to opt-in to overdraft services. TCF provided scripts to branch employees and instead of asking whether customers wanted to have their overdrafts covered for a $35 charge, the scripts instructed employees to ask customers if they wanted their “TCF Check Card to continue to work as it does today?” TCF considered a response of “yes” to mean that the customer had agreed to opt-in to the overdraft program. The CFPB alleges that “many consumers did not understand that by choosing to have their debit card ‘continue to work as it does today,’ they were granting the bank permission to authorize transactions and charge them overdraft fees that they would otherwise not have to pay.” TCF pressured consumers to opt-in: TCF instructed employees to “overcome objections” by presenting hypothetical situations where the customer was in an emergency and needed to pay for something, but the transaction was declined unless they opted in. Furthermore, the CFPB claims that employees were instructed not to “over-explain” the terms and conditions of the overdraft program.

The CFPB’s press release also describes TCF’s bonus program that incentivized staff to get consumers to opt-in to the program. The CFPB highlights TCF’s 2010 program that offered branch managers up to $7,000 in bonuses for getting a high number of new opt-ins. TCF eventually phased out the bonus program, but still set high opt-in goals for employees, requiring staff to achieve opt-in rates of 80% or higher in some cases. While TCF’s official policy was that an employee could not be terminated for low opt-in rates, many employees believed that failure to meet sales goals could result in termination.

The Bureau alleges that TCF’s overdraft strategy worked so well that by mid-2014 nearly two-thirds of the banks customers had opted in. In fact, the program worked so well that TCF’s CEO even named his boat “Overdraft.”

In its complaint, the Bureau requests relied for consumers in the form of restitution and the refund of moneys paid. The Bureau is also seeking civil money penalties against TCF.