The shady scheme of removing ATM-fee placard disclosures, and then suing ATM operators for breaking fee-disclosure rules, will soon be ineffective. A House vote held Monday evening was in favor, with a 371-0 tally, of an amendment that would nullify the requirement.
Currently, the Electronic Funds Transfer Act requires ATM owners — banks, credit unions and other companies — to place physical signs and on-screen notices of the fees for using the ATM. Failure to comply with this rule opens the door to lawsuits, which can lead customers to recover up to $500,000 in additional legal fees and expenses.
In an attempt to get rich quickly, unscrupulous individuals would purposefully remove or deface ATM-fee placards and threaten to sue or actually sue for noncompliance.
“The threat of lawsuits has caused many credit unions to go to extraordinary steps to document compliance, increasing the cost of operating ATMs to the detriment of credit unions’ member-owners,” wrote Bill Cheney, president and CEO of the Credit Union National Association, in a July 9 letter to House Speaker John Boehner.
Credit unions, which are nonprofit institutions, often return profits to its members in the form of lower account fees and better interest rates. Extra costs for credit unions mean that their members suffer as well. Banks don’t like the costs eating into their bottom line either.
“The American Bankers Association strongly supports this legislation, which would help protect banks from frivolous lawsuits while maintaining consumer protections with mandatory on-screen disclosures,” said Jeff Sigmund, an ABA spokesperson, in an email statement. “It would also help provide needed regulatory relief for banks across the country.”
ATM operators will still be required to prompt users with electronic disclosures before they perform a transaction that may result in a fee.
Even if the physical placards are not required, financial institutions may continue to place them at ATMs — they just won’t be a liability that can result in expensive lawsuits.
The Senate version of the bill is awaiting a vote.