TD Bank froze her accounts after an e-transfer. It won’t tell her why

A Toronto woman says TD Bank locked her out of her accounts for over a week after it said an e-transfer she received from a small business could be fraudulent.

Siera Hancharyk told CBC Toronto what she sees as the bank’s lack of transparency is concerning, saying it would not explain why the transfer was flagged, was slow to resolve the issue and was inflexible on how the issue could be resolved.

Now, left with no answers, she’s worried it could happen again.

“I was crying on the phone with them,” Hancharyk said. “But TD refused to tell me why they can’t fix it.”

Hancharyk is a small business owner selling earrings that reflect her Indigenous heritage, and says she is regularly paid by e-transfer.

On July 16, another small business owner sent her a $50 e-transfer to her personal account.

The next morning on July 17, when Hancharyk tried to pay for a coffee, her card was declined, and she received a notification that both her chequing and savings accounts were suspended, she said.

“I was really embarrassed.”

Vendor told to travel from remote community: woman

“I called up TD,” she said. “They were saying the e-transfer I had received was marked as fraudulent,” she said.

The $50 was the fee from a vendor to rent a booth at the Indigenous crafts market that Hancharyk and colleagues are planning for the fall, to be held at the Cecil Community Centre on Sept. 17.

TD Bank told Hancharyk if she wanted her accounts unfrozen, the vendor, who also banks with TD, would have to come in to one of the bank’s branches in Toronto to prove their identity, she said.

The vendor lives more than six hours away, in an Indigenous community north of Parry Sound, and could not make the trip anytime soon, said Hancharyk.

Hancharyk says she called TD daily for a week, but the bank would not give her access to her money, she said. With rent coming due and bills piling up, Hancharyk panicked.

“I said to TD over the phone: I’m going to get more e-transfers like this. I run a small business, I don’t understand why this e-transfer got marked as fraudulent,” she said. “Seven days now, no card, no access to my money.”

Bank won’t say why transfer marked as possible fraud

Hancharyk approached CBC Toronto a week after her accounts were frozen.

After CBC Toronto contacted TD Bank about Hancharyk’s story, the bank called her to say it could take several more days to resolve the issue. Less than 12 hours later, she discovered her accounts were unlocked.

“I can share that if there is a suspicious transaction on an account, it may be flagged as potential fraud and out of an abundance of caution and protection for the customer, there may be a temporary hold placed on the account for review,” said Ashleigh Murphy, the senior manager of corporate and public affairs at the bank.

The bank did not respond to questions from CBC Toronto about why it identified Hancharyk’s e-transfer as fraud, or how it identifies potential fraud.

Hancharyk found the whole experience “beyond stressful.”

Banks should face penalties: professor

Robert Kerton, a professor emeritus at the University of Waterloo who specializes in consumer economics and helped create the federal Financial Consumer Agency, which enforces consumer protection laws, told CBC Toronto it’s unreasonable that TD took more than a week to unlock the bank accounts.

For one thing, the bank should have allowed the vendor to go to the closest branch to prove their identity, he said.

“This can happen to any small business,” he said. “It’s also possible that a small business owner like Hancharyk and the vendor she was working with aren’t priority clients”.

He points to a2022 study by J.D. Power, a firm that conducts analysis on multiple sectors including financial services, that found bank customers deemed by their bank as more financially “unhealthy” were far less satisfied with their bank’ customer service and two times more likely to be charged fees.

He encouraged Hancharyk to file a complaint with the Financial Consumer Agency.

Banks currently have no incentive to resolve an alleged fraudulent e-transfer quickly, he explained. If the federal government introduced regulations to compel banks to resolve these types of issues within a set deadline or face a substantial fine, customers wouldn’t be locked out of their accounts for a week, he said.

“The key item that would really help is a penalty,” he said. “That would get their attention and set up a system that works better for the customer.

He recommends Hancharyk get a second account at a credit union, purely for business, as a backup.

For Hancharyk’s part, while she’s glad it was resolved, she’s worried about the next e-transfer she receives.

“I still feel that fear,” she said. “What if this happens again?”