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The Green Sheet Online Edition

July 09, 2012 • Issue 12:07:01

ATM regs under fire, class action denied, consent decree approved

In recent ATM legal and regulatory news, a Texas federal judge refused to certify a class action pertaining to fee notices, the House Financial Services Committee set a date to review bipartisan legislation to ease ATM notice regulations and a Pennsylvania judge approved a consent decree requiring ATM accommodations for the blind. Texas judge denies class certification

On May 28, 2012, a judge in the San Antonio division of the Western District of Texas denied class certification for a claim alleging Houston ATM distributor Dixie Farm Texaco Inc., independent gas station chain Three Star Venture Inc. and RBS Citizens N.A. failed to put notices of ATM fees on the outside of their ATMs. The Electronic Fund Transfer Act (EFTA) requires dual fee notices, one physically on the machine and the other on the ATM screen.

U.S. District Judge Xavier Rodriguez did not address the merits of the claim in his order dismissing the complaint. He instead found the complaint did not meet minimum legal requirements for class certification. The judge held that plaintiff Jimmie Lee Pfeffer's assertion (on behalf of the class) that the class was too large to enumerate was not the same as actual evidence demonstrating that to be the case. The judge also stated the complaint failed to precisely define when the gas stations' ATMs were left without stickers. Rodriquez reasoned that if the court didn't know for how long the ATMs lacked stickers, it could not know who was affected by the lack of notice.

Pfeffer filed an amended complaint the next day dismissing all class allegations, removing RBS as a party to his claim and moving to proceed with his individual claim that the remaining defendants "imposed ATM fees without providing any posted notice as required by the EFTA."

CUNA calls for Regulation E revision

Lawsuits similar to Pfeffer's are of concern to lawmakers in Washington. H.R. 4367, bipartisan legislation to ease ATM notice regulations, was scheduled for a House Financial Services Committee review June 27, 2012.

The Credit Union National Association believes more than 100 class-action lawsuits have been filed against credit unions over failure to provide adequate ATM notices. According to CUNA, the cost to sue is low when compared with the potential reward: the lesser of either $500,000 or 1 percent of the net worth of the ATM operator. CUNA represents 7,200 state and federal credit unions and is campaigning vigorously to change fee disclosure regulations.

Ryan Donovan, CUNA Senior Vice President of Legislative Affairs - in remarks published June 20, 2012, in The Hill, a Washington newspaper covering Congress - called for an end to the physical notice requirement because it drains resources from credit unions without offering benefits to its members. He said it costs credit unions $2,000 per machine to comply with the physical ATM notice requirement - money that could have gone out to customers as loans.

Donovan labeled the ATM fee disclosure lawsuits frivolous and said ATM notices are being removed or destroyed; then the machines are photographed to prove noncompliance - all without the knowledge of targeted ATM owners. Nonetheless, many credit unions decide to settle the lawsuits because it costs too much to defend them, Donovan said.

Donovan also reiterated points CUNA made in a June 4, 2012, letter to the Consumer Financial Protection Bureau. CUNA urged the bureau to use its exemption authority to amend Regulation E, the Federal Reserve Board's rule implementing the EFTA, to end the duplicate disclosure requirement at ATMs.

"If the agency is not able to do that, it should work with CUNA and others to support appropriate legislative relief to amend the Electronic Fund Transfer Act," the letter said.

Judge signs consent decree in Pittsburgh

On June 6, 2012, the U.S. District Court for the Western District of Pennsylvania, approved a consent decree binding Pittsburgh's Century Heritage Federal Credit Union to an agreement to make its ATMs accessible to the blind within 90 days.

Plaintiff Robert Jahoda, who is blind, reportedly is suing multiple financial institutions to force them to comply with the Americans with Disabilities Act (ADA) requirement that ATMs be accessible and usable by blind people. ADA guidelines require, among other things, that ATMs be speech enabled, that Braille instructions for the speech mode be provided at the machine and that input control be "tactilely discernible." end of article

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