The ATM Fee Disclosure Bill & What it Means to Your Credit Union

Written by Steve Van Beek

By now, you'd probably heard that the ATM Fee Disclosure bill has passed the Senate and awaits President Obama's signature.  Great news to be sure, but there are some things to keep in mind.

Summary.  A quick summary of the issue may be useful.  The bill would remove the federal requirement for posting a physical notice on the ATM itself.  The on-the-screen notice will still be required in all situations.  

Biggest Impact.  The biggest impact this change will have is that it will reduce your litigation risks related to ATM notices.  Of course, you could still get sued after this law is in place (this is America, you can be sued for anything) - but you'd have an outstanding defense (I can't think of a better defense than Congress specifically looked at this and decided it shouldn't be law of the land).  

Note:  This law wouldn't change the outcome of any ongoing lawsuits or settlements.  The allegations in those suits came from when the underlying requirement was still law (and it still is until the President's signature).  

State Laws.  Another big issue to consider is that this bill will change the federal law on ATM fee disclosures.  There are state laws that could still require an "on the machine" fee disclosure even after this law is passed.  I know New York state has such a law and I'm sure there are others (if you know of others - please feel free to leave a comment on this blog post along with the citation if you have it).  

Remove Notices?  This all leads to the question of what your credit union should do after this law is passed.  The clearest is that you can reduce the time and effort spent tracking, photographing, documenting and auditing the notices on your ATMs.  These additional resources were all needed to help reduce the litigation risk.  When the bill is signed, the need for that amount of due diligence and documentation is removed.  

But what about the actual notices on our ATMs?  My thought is there is no reason to take any action to remove your existing notices.  While they would no longer be required, there is no harm in keeping them on the ATMs.  And, there are still benefits to keeping the notices.  

1. If you were sued after the law change, you'd have another defense.
2. As mentioned above, there could be a state law that requires the disclosure "on the machine."
3. Members (and non-members) are given additional notice about any fees (of course, they'll still receive the "on the screen" notice prior to being charged a fee.

Amendments to Regulation E.  When signed, this law will amend the Electronic Funds Transfer Act (EFTA).  Regulation E implements the EFTA and hopefully the CFPB will move very swiftly to amend Regulation E to ensure that everyone is aware of the change.  

Stepping into the wayback machine, here is a link to a blog post from April 2011 where I took a look at how confusing the existing language of Regulation E was and that this could actually be part of the reason there have been issues with fee disclosure notices.  Here is a snippet from that post:

"Here is my two-cent answer:  When small institutions are being sued around the country for ATM fee disclosures issues, it might be prudent to take a look at the underlying regulatory requirement to see if the disclosure requirements are clear and straightforward.  Credit unions want to comply with the regulations - don't make it harder than it needs to be." 

Obviously, the CFPB didn't make this issue a priority previously (remember their plans to streamline?).  But, kudos to Congress for stepping up and making this commonsense change to help remove one burdensome requirement from credit unions.  

Note:  The removal of the requirement will occur after President Obama signs the bill and enacts it into law.  Thus, credit unions' litigation and compliance risk will reduce at that point.  The CFPB moving quickly to amend Regulation E and clarify the remaining requirement will be the icing on the cake.  Hopefully we don't have to wait too many birthdays.  

Comments

[Tracy Ryan]

Nevada has a state law requiring the notice on the ATM and on the screen. Nevada Revised Statutes (NRS 660.052)

[Steve Van Beek]

Thanks Tracy! Much appreciated!

[Arnette Grossweiler]

On ATMs, California requires electronic disclosure, but not a posted notice (California Financial Code 13080). Point-of-Sale devices, however, require a label meeting federal standards, as well as an electronic disclosure in some cases (California Financial Code 13081).

[Steve Van Beek]

Thanks Arnette - very helpful!