ILNews

ATM fee disclosure rules and related litigation

Jenny Montgomery
April 25, 2012
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In 2011, nine lawsuits were filed in the United States District Court, Southern District of Indiana, in which plaintiffs sued owners or operators of ATMs for failing to post a sign advising users of usage fees. Similar suits have been filed around the country, and groups that represent ATM owners’ interests are calling for a change to federal law to stop further litigation.

The American Bankers Association, the National Association of Convenience Stores and five other national organizations wrote a letter in February to Washington, D.C., lawmakers, saying the lawsuits threaten the economic viability of ATM operators.

In their letter to members of the Senate Committee on Banking, Housing and Urban Affairs and members of the House Committee on Financial Services, the groups advocated eliminating an ATM fee disclosure requirement that they say is no longer necessary due to advances in technology. Under the Electronic Fund Transfer Act and its implementing rule, Regulation E (12 CFR 205.16), all ATMs must have two notices of a usage fee – one on-screen, and one attached to or near the ATM.

Financial industry leaders say that the dual notice may have been necessary before on-screen notices were as easy to read as they are today, but one inherent problem with the requirement for an exterior sign is that stickers or signs can be removed or defaced easily, putting the ATM owner at risk of a lawsuit.

According to Regulation E, when an ATM lacks a sign or placard advising of additional fees, successful class-action plaintiffs are entitled to recover the lesser of $500,000 or one percent of the net worth of the ATM operator, plus attorney fees and costs.

Derek Edwards, of the Tennessee firm Waller Lansden Dortch & Davis, has defended clients in more than 100 ATM fee disclosure suits in courts around the country, including a case in Indiana, Lear v. ATM Access, No. 1:2011-CV-01321. He said that many ATM fee disclosure cases are filed against small ATM operators whose machines are housed inside larger businesses. Those cases seem to settle early, with no escalation to class-action status, he said.

Edwards estimates he spends at least half of each day working on defending against fee disclosure lawsuits, but estimating the number of similar cases nationwide is difficult, as many cases are coded improperly when entered in the PACER court records system. Congress may therefore be unaware of how widespread these lawsuits have become, he said.

On April 17, 2012, two members of the House Committee on Financial Services – U.S. Reps. Blaine Luetkemeyer, R-Mo., and David Scott, D-Ga., – filed H.R. 4367, which would eliminate the dual notice requirement required by EFTA. No further action had occurred on that bill by IL deadline.

An unrelated case that the U.S. Supreme Court is currently considering could affect the ability to recover damages under EFTA. The case – First American Financial Corp., Successor in Interest to The First American Corp., et al., Petitioners v. Denise P. Edwards – presents a question of whether a plaintiff may bring a class-action complaint against a defendant when the plaintiff has not suffered any “injury of fact,” as defined by Article 3, Section 2 of the U.S. Constitution. Some ATM fee disclosure cases have been dismissed for failure to state a claim on which relief can be granted; while others have been successful in earning class-action status.•

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  1. All the lawyers involved in this don't add up to a hill of beans; mostly yes-men punching their tickets for future advancement. REMF types. Window dressing. Who in this mess was a real hero? the whistleblower that let the public know about the torture, whom the US sent to Jail. John Kyriakou. http://www.nytimes.com/2013/01/26/us/ex-officer-for-cia-is-sentenced-in-leak-case.html?_r=0 Now, considering that Torture is Illegal, considering that during Vietnam a soldier was court-martialed and imprisoned for waterboarding, why has the whistleblower gone to jail but none of the torturers have been held to account? It's amazing that Uncle Sam's sunk lower than Vietnam. But that's where we're at. An even more unjust and pointless war conducted in an even more bogus manner. this from npr: "On Jan. 21, 1968, The Washington Post ran a front-page photo of a U.S. soldier supervising the waterboarding of a captured North Vietnamese soldier. The caption said the technique induced "a flooding sense of suffocation and drowning, meant to make him talk." The picture led to an Army investigation and, two months later, the court martial of the soldier." Today, the US itself has become lawless.

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