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. The CFPB revised Regulation E as directed by legislation issuing a new regulation on March 26, 2013. The regulatory change became effective immediately upon issuance of the rule.
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.