WASHINGTON–A coalition of credit-union and banking lobbyists joined the ATM industry in calling for legislation eliminating the need for a physical fee disclosure outside ATMs to stop the proliferation of lawsuits alleging violation of the Electronic Funds Transfer Act.
The coalition said the requirement for a dual disclosure of fees, including a placard attached to the outside of an ATM, is no longer necessary because the disclosures are included on the screen at every ATM before a consumer may complete a transaction.
The push comes as credit unions are becoming increasingly targeted by individuals who travel the country and photograph non-compliant machines before filing lawsuits alleging violation of the act (see story). Credit unions have paid tens of thousands of dollars to settle such suits over the past few months, with numerous suits still pending.
“We are writing to request your assistance in eliminating an unnecessary ATM fee disclosure requirement that has encouraged a large and growing number of frivolous lawsuits across the nation,” said the group, which includes CUNA and the American Bankers Association, in a letter to congressional leaders. “If unchecked, these lawsuits will threaten the economic viability of ATM operators and may result in reduced consumer convenience.”
The letter explains that under the EFT Act, and its implementing rule, Regulation E, ATM operators are required to provide two separate notices to consumers regarding the imposition of a fee for use of an ATM. One disclosure is incorporated into the video monitor and requires customers to affirmatively opt-in (via pressing an ATM button) if he or she accepts the fee. The second disclosure requires ATM operators to attach a placard to the ATM stating that a fee may be charged.
Without such a placard attached, the statute prescribes that in a successful class action, plaintiffs can recover “the lesser of $500,000 or 1% of the net worth of the (ATM operator),” plus attorneys’ fees and costs.
The letter maintains this “statutorily-prescribed bounty” has generated incentives for people to remove the placards and thus launch a spurious lawsuit. Indeed, “litigants have photographed the ATM without the placard notice and filed suit,” the letter states.
According to the group, the physical placard requirement is no longer useful, as most consumers expect to pay a fee at an ATM unless they are using an ATM owned or operated by the bank or credit union at which they have their account.
“Accordingly, on behalf of our members,” the letter concludes, “We respectfully request that you pass legislation eliminating the unnecessary placard notice requirement contained in the EFT Act. The repeal of the dual signage provision will stop the flood of frivolous litigation and cause no harm to consumers. Without relief on this subject, the number of these baseless lawsuits will continue to rise, as will the cost of this service to consumers. Such actions could very well reduce the number of ATMs deployed and result in reduced consumer convenience.”
Joining CUNA and the American Bankers Association in the bid are the Electronic Funds Transfer Association, Independent Community Bankers Association, National Association of Convenience Stores, American Gaming Association and ATM Industry Association.
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