May Legislative Roundup

There are a wide variety of legislative and regulatory initiatives in which EFTA is involved this spring. These include a movement to change the Electronic Funds Transfer Act to eliminate the requirement that usage fees be posted on the outside of an ATM. This is a vestigial requirement that has outlived its usefulness as modern ATM technology permits a much more detailed, convenient notice on the ATM screen itself as part of an ATM transaction.

Also on the EFTA legislative and regulatory calendar are regulations governing the restrictions on the use of TANF benefits at liquor stores, casinos and adult-oriented entertainment clubs, cybersecurity and overdraft protection.

In an informal interview Kurt Helwig, EFTA CEO, and Dennis Ambach, the organization's senior director for government relations, discuss prospects and strategies for these issues.

We pick up the interview with a discussion about pending legislation in the Senate and House (S. 3204 and H.R. 4367) that would eliminate the dual ATM notice requirement. Can the bills, now under consideration, become law?

H.R. 4367: Beauty in Simplicity

All too often the public only hears about 2,500 plus page laws (monstrosities if you will) coming from our Congress. Let’s round up the usual suspects: Obamacare, Dodd-Frank and year-ending omnibus spending bills. Bigger is not better when it comes to law making.

Blaine Luetkemeyer (R-MO)
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I am more pleased then to offer thoughts on a bill recently introduced by Rep. Blaine Luetkemeyer of Missouri. Responding to a real need in the ATM industry, Rep. Luetkemeyer sponsored H.R. 4367 along with Rep. David Scott of Georgia. Weighing in at a sleek and sturdy one and half pages, H.R. 4367 proposes to streamline and update the Electronic Funds Transfer Act’s requirement that an ATM operator provide a consumer two fee notices (one on the screen and one on the physical ATM) before a balance inquiry or cash withdrawal.



David Scott (D-GA)
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Years ago, the dual fee notification requirement was an important consumer protection measure because some screens on older ATMs could not deliver a robust notice. Current ATM screens now offer the consumer a very robust fee notice (thank you Triple Des, ADA audio requirements and good, old investments by the ATM industry). Unfortunately for the industry, some unscrupulous characters have started a national trend of defacing the ATM’s physical fee notice placard, hiring trial lawyers to accuse ATM operators of non-compliance with the EFTA and demanding cash settlements.

The Electronic Funds Transfer Association and the ATM Industry Association last year began to reach out to Capitol Hill on the problems with these lawsuits and the need to update the EFTA’s dual fee notification requirement. The Consumer Financial Protection Bureau is also involved. The Bureau asked for public comment on whether the dual fee notification requirement ought to be changed. Of the more than 100 comments letters filed, a strong majority supported the dual fee notification elimination. The American Bankers Association, American Gaming Association, Credit Union National Association, Independent Community Bankers Association, National Association of Federal Credit Unions and the National Association of Convenience Stores are also working hard to eliminate the dual fee notification requirement.

Reps. Luetkemeyer and Scott deserve much credit for offering a simple solution to an important problem. H.R. 4367 fully protects consumers and it’s in the spirit of updating and streamlining an old regulation. It deserves broad support.

 

ATM Fee Signage (Continued)

According to the Beaumont Enterprise a New York man is suing a Texas credit union alleging that it failed to post a notice on one of its ATMs stating the cost of using the machine, as required by the Electronic Funds Transfer Act.

Five weeks ago we blogged about lawsuits over fee notification which are costing the financial industry big bucks. I'm sure there are cases where the disclosure notice was missing from an ATM. The court will decide if this case is one of them. But the costs of the nuisance suits will eventually be passed on to consumers like in every other industry. In "ATM Fee Disclosure: Updating Regulation to Limit Jackpot Justice" we made the argument that nuisance lawsuits over this issue have become a get-rich quick cottage industry.

I know some people find it shocking that banks actually charge people - with whom they have no commercial relationship - to use the bank's equipment. Next thing you're going to tell me is that if a perfect stranger knocks on my door and wants to use my car I can't charge him for the gas.  

According to the court filing, the plaintiff in this particular case claims that that he used an ATM of the Firestone Community Federal Credit Union  in Orange and was charged two bucks, and that the fee notification was not posted on the machine as required by law.

If the plaintiff is successful in his legal quest, what would be the remedy? I personally think he should be compensated. I think a fair number would be - two bucks. If I ran Firestone Community FCU I'd issue him a bank check for two dollars and point him to one of the Lone Star State's many fine check cashiers. See how he likes those fees.

At some point ATM signage suits become frivolous. I would think, given the publicity that this issue has received within the credit union industry, that any credit union or bank would be crazy not to make sure by now that their fee notices were plastered to their ATMs with Gorilla Glue, Mighty Putty or something used in the space program.

Meanwhile, speaking of deciding,  I think its time for Congress to decide whether this whole thing over ATM signage has gotten out of hand. It's time to recognize, 15 years after ATM owners started charging for the use of their property, that fee notification on the screen, which is much more secure and visible, fulfills the intent of the EFT Act.

That's my opinion. What's yours?