The Consumer Financial Protection Bureau said that since 2015, TD provided wrong information about personal bankruptcies, credit card delinquencies, accounts that had been closed, and accounts that it knew or suspected had been fraudulently opened.
It also said TD also took "far too long," sometimes more than one year, to correct mistakes, and ignored some disputes because it diverted resources elsewhere and was distracted by its failed attempt to buy Tennessee bank First Horizon (FHN.N).
The CFPB said this "abusive" conduct took unreasonable advantage of customers' inability to monitor how the Cherry Hill, New Jersey-based lender, one of the 10 largest U.S. commercial banks, reported their credit information.
"TD Bank illegally threatened the consumer reports of its customers with fraudulent information and then barely lifted a finger to fix it," CFPB Director Rohit Chopra said in a statement.
The payout includes a $20 million civil fine, plus $7.76 million of restitution to tens of thousands of customers.
TD did not admit or deny wrongdoing.
In a statement, TD said it cooperated in resolving the matter, and has "voluntarily and proactively implemented enhancements to our furnishing and dispute handling practices."
The bank has more than $400 billion of assets, and ended July with 1,150 branches throughout the eastern United States. Its Canadian parent Toronto-Dominion is based in Toronto.
Wednesday's enforcement action is the CFPB's second against TD.
In August 2020, the CFPB ordered TD to pay $122 million in fines and restitution for charging overdraft fees on ATM and debit card transactions to customers who had enrolled in an overdraft service that the bank had claimed was free.
