TD Bank to retire coin-counting machines after reports of errors

NEW YORK (Reuters) - Toronto-Dominion Bank's TD.TO TD Bank will retire its Penny Arcade coin-counters, the company said on Thursday, in the wake of lawsuits claiming that the machines were short-changing customers.

General view of a TD Bank branch and its drive-thru after the company held its annual general meeting in Calgary, Alberta, April 3, 2014. REUTERS/Todd Korol

The counters, which featured a female cartoon character on their video screens, allowed customers to swap loose change, even in large amounts, for paper currency. They were originally created by Commerce Bank, a New Jersey lender that TD bought in 2008.

In recent months, the Canadian lender has been sued and featured in news reports saying that the machines failed to count accurately.

In one proposed class action filed last month in Manhattan, New York customer Jeffrey Feinman said a Penny Arcade credited him for just $25.44 when he deposited $26 of coins, and $30.05 when he deposited $31 of coins.

“We have determined that it is difficult to ensure a consistently great experience for our customers,” Michael Rhodes, TD’s head of consumer bank, said in a statement. “We will continue to assess the Penny experience and intend to appropriately address customer impact.”

The bank had taken the machines out of service in early April for retesting following media reports about the problems, and had aimed to eventually bring them back.

Rhodes said the reports of performance issues led the bank to reassess the machines. He noted that the number of people who used them had fallen in the last few years.

The bank said it would still accept pre-rolled coins in exchange for paper money.

Feinman’s lawsuit claimed that the Penny Arcades counted 29 billion coins in 2012. The service was free for TD account holders, while others were charged an 8 percent fee.

Penny Arcade’s problems “affected not only commercial customers of TD Bank, but also those children that brought in their ‘lemonade stand’ money to deposit in their savings accounts,” said Michael Criden, a lawyer who filed a proposed class action last month in federal court in Miami.

TD spokeswoman Judith Schmidt declined to discuss pending litigation.

Reporting By Karen Freifeld; Editing by Diane Craft and Richard Chang