ATM Fee Disclosure Bill Unanimously Passes House

The U.S. House of Representatives voted unanimously yesterday in favor of legislation that would eliminate a burdensome regulation mandating that every ATM carry a physical placard notifying consumers of potential fees.

H.R. 4367 passed by a 371-0 vote after also being unanimously approved in a House Financial Services Committee mark-up on June 27. The new legislation would protect credit unions and other financial institutions from frivolous lawsuits while still maintaining important consumer protections. The bill was introduced by Reps. Blaine Luetkemeyer (R-Mo.) and David Scott (D-Ga.), and among its 127 cosponsors are Reps. Rick Larsen (D-Wash.), Doc Hastings (R-Wash.), Kurt Schrader (D-Ore.) and Greg Walden (R-Ore.). A companion Senate measure, S. 3204, has 17 co-sponsors, including Sens. Jeff Merkley (D-Ore.) and Ron Wyden (D-Ore.).

“I cosponsored and voted for the Electronic Fund Transfer Act because it eliminates a duplicative regulation and will help bring an end to frivolous lawsuits,” Larsen said. “This is a commonsense fix that will help credit unions and community banks focus on what they’re best at: serving our communities by helping small businesses create jobs and helping families buy homes.”

Under Regulation E, in addition to displaying fee disclosures on ATM screens, financial institutions that provide ATM services are currently required to display a physical notice on the ATM stating itself that a fee will be charged. While designed as a consumer protection, the requirement has created a needless regulatory burden—and has led to a rash of predatory lawsuits, such as the one that hit North Coast Credit Union in April. So-called “ATM vigilantes” are scouring the country for sticker-less ATMs, going as far in some cases as intentionally removing the fee postings in an effort to create non-compliance. Suits are then filed in pursuit of cash settlements.

ATMs would now be required simply to display the fee disclosures on-screen and give users an opportunity to opt out before any fee is assessed.

Terry Belcoe, president and CEO of North Coast Credit Union, said that as discouraging as it was to have the suit filed against his credit union, it was equally encouraging to see such quick response to the issue from Congress.

“With the labor and cost burdens of regulatory compliance already so onerous, having something as frivolous and wasteful as these ATM disclosure lawsuits on top of it, when no valid purpose is served, is simply shameful,” Belcoe said. “Seeing members of Congress, like Rep. Rick Larsen, recognize this and step up to put a stop to it demonstrates that our legislators do listen and are willing to correct legislation that didn’t work the way it was intended.”

Belcoe has been an active advocate for the corrective legislation, working closely with Larsen’s office and urging broad support.

“Working for a credit union that fell victim to this particular scam, I certainly have been following the progress of the bill closely,” Belcoe said. “I’m not sure passage of the bill would have any direct affect in our situation, but my hope was that by speaking up as one of those ‘victims’ and refusing to pay the guy to make it go away, my hope was that it might at least shine a light on the problem and influence those in power to do the right thing.”

Belcoe said the credit union hasn’t heard from the plaintiff recently, so progress in their specific ATM lawsuit has been slow. However, he said that according to the credit union’s attorney, “the attorney for the plaintiff was embarrassed by all of this and hoped we could just provide enough proof of good faith efforts to comply that the whole thing would just go away.”


Questions? Contact a member of the Association’s Legislative Affairs team:

Jennifer Wagner, Vice President of Legislative Advocacy
Mark Minickiello, Vice President of Legislative Affairs
Stacy Augustine, Senior Vice President & General Counsel

Posted in Advocacy News, Compliance News, CUNA, Financial Education.