June 26, 2012 – NAFCU wrote the House Financial Services Committee Monday to encourage swift passage of H.R. 4367, a bill scheduled for mark-up Wednesday that would repeal an outdated ATM regulation that has led to a spike in frivolous lawsuits facing credit unions.
H.R. 4367, introduced by Reps. Blaine Leutkemeyer, R-Mo., and David Scott, D-Ga., would repeal a provision contained in the Electronic Funds Transfer Act that requires both a physical placard and a notice on ATM screens that disclose ATM fees.
In a June 25 letter to the committee, NAFCU Executive Vice President of Government Affairs Dan Berger pointed out that the physical placard fee notice “may have played a useful role” when Congress enacted the statutory provision in the 1990s since ATMs were technologically incapable of providing that information on screen. But today, such signage is unnecessary since ATM users see what the fee is on the screen.
“If the customer does not affirmatively accept the fee, the transaction is cancelled and the customer is not charged,” Berger said. “Our members fully support this fee disclosure requirement.”
Currently, if a physical placard is not attached to the ATM, a class action lawsuit can be filed and a plaintiff is entitled to recover “the lesser of $500,000 or 1 percent centum of the net worth of the (ATM operator),” plus attorneys’ fees and costs. “This statutorily prescribed bounty has created a strong incentive for spurious lawsuits,” Berger noted.
Passing H.R. 4367 will put an end to these frivolous litigations, he wrote, and cause no harm to consumers. “Without relief, the number of 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.”
Should the bill win passage by the committee, it would then head to the House floor for consideration