For nearly two months, credit unions around the country have been urging members of Congress to support
H.R. 4367, the Electronic Funds Transfer Act, sponsored by Reps. Blaine Luetkemeyer (R-MO) and David Scott (D-GA). Recently, Sen. Mike Johanns (R-Nebraksa) has filed a Senate companion,
S. 3204, and the League has begun urging Senators to cosponsor this as well. This legislation provides a commonsense, and much needed update, to the Electronic Funds Transfer Act that will protect ATM owners and operators, such as credit unions, from frivolous lawsuits while continuing to afford consumers the protections and rights they currently enjoy. The legislation has added two Florida co-sponsors in the last two weeks.
Last week, members of the League's Governmental Affairs (GA) team met with Sen. Marco Rubio's (R-FL) staff to push the virtues of this legislation, and its efforts have paid off. This morning the League learned Sen. Rubio has officially signed on to co-sponsor this important piece of legislation, a direct result of the efforts the League’s GA team and volunteers have initiated.
Under Regulation E, that enforces the Electronic Funds Transfer Act, ATM operators must provide users with two separate notices that a fee will be charged for use of the machine, a physical sign as well as an on-screen notice before the transaction is complete. The dual notice requirement, under current regulations, has led to abuse that harms ATM owners and ultimately drives up the price of services for consumers. The penalty under Reg. E is so high that it has led to a “bounty” and consequently what can best be described as “bounty hunters.” A successful class action lawsuit for violation of the dual notice requirement can be as high as $500,000 or one percent of the owner’s net worth plus attorneys’ fees and costs. In recent years, the physical signs on the outside of the ATM are either being removed, or destroyed, photos taken of the machine, and lawsuits for non-compliance against the owner of the machine are being filed. Even though the plaintiff affirmatively agreed to the charge, they use this dual notice requirement technicality to file the suit. The fact that the plaintiff agreed to the fee is not available as an affirmative defense to the defendant credit union or other ATM operator.
Under H.R. 4367/S. 3204, on-screen fee notice and option to cancel the transaction without cost will remain. This gives the person using the ATM the notice required under the EFTA and Reg. E, and thus fully protects consumer rights as envisioned under the Act and regulations. Only the physical sign requirement is removed from the Act and the regulations. This bill results in the full existing protection for consumers, without subjecting ATM owners and operators, such as credit unions, to these frivolous, costly, and invented lawsuits.