The Electronic Funds Transfer Act
(EFT) and its implementing rule, Regulation E (12 CFR 205.16), required ATM
operators to provide two separate notices to consumers regarding the imposition
of a fee for use of an ATM. The first was a fee disclosure on the ATM screen
where a consumer is required to affirmatively indicate whether he or she
accepts the fee. If the fee is declined, the transaction is canceled.
Regulation E also required ATM operators to attach a physical placard to the ATM
stating that a fee may be charged. If the physical placard was not attached,
the law prescribes that plaintiffs are entitled to recover “the lesser of
$500,000 or 1 per centum of the net worth of the [ATM operator].”
While NAFCU fully supports the disclosure of ATM fees, the dual signage
requirement encouraged a large and growing number of lawsuits among financial
institutions. Placards affixed to ATMs had been intentionally removed, and
before the ATM operator was aware of the missing placard, litigants had
photographed the ATM without the placard notice and filed suit.
In April 2012, bipartisan legislation (H.R. 4367) was introduced in the U.S.
House of Representatives by Financial Service Committee members, Blaine
Luetkemeyer (R-MO) and David Scott (D-GA), that would amend EFT and eliminate
the unnecessary placard fee disclosure requirement (the onscreen fee notice
would still be required). On July 9, 2012, the House passed the legislation by
a vote of 371-0. Led by Senator Mike Johanns (R-NE), on December 11, the
Senate cleared the House-passed bill by unanimous consent. President Obama then
signed the bill into law on December 20, 2012.
Passage of this important
legislation removed the compliance burden credit unions faced in checking,
photographing and documenting their ATMs as a defense against frivolous
lawsuits. NAFCU, on behalf of our
members, thanks those who led this effort and appreciates Congress’ recognition
and elimination of this redundant and overly burdensome regulation.