In 1999, Congress passed a law requiring ATM fee disclosures to be both (i) posted “in a prominent and conspicuous location on or at the [ATM],” and (ii) provided on the screen or on a paper notice dispensed from the ATM “after the transaction is initiated and before the consumer is irrevocably committed to completing the transaction.” The statute further required that the on-screen notice had to include the actual amount of the fee the consumer would be charged, but the physical notice posted “on or at” the ATM only had to state “the fact that a fee is imposed by such operator for providing the service.” If the notices were not both provided, the ATM operater was not allowed to charge any fee for use of the ATM. The law further created a private right of action (i.e., the right of a private consumer to sue the ATM operator for violations of the law) that could result in an ATM operator being held liable for actual damages, statutory damages for individual or class actions, and costs and attorney’s fees of the plaintiff(s). [See 15 U.S.C. 1693m(a).]
The industry howled in objection because the double notices did not provide substantively more protection to consumers, although they did expose banks to more risk of liability and litigation. Plaintiffs and their lawyers started actively seeking ATMs that posted only one notice and filing lawsuits that resulted in significant settlements. After about thirteen years (!), Congress finally listened to the industry. On December 20, 2012, the President signed a bill amending the Electronic Fund Transfer Act (H.R. 4367) to eliminate the requirement that a fee disclosure be physically placed "on or at" an ATM. Earlier this week, on March 26, 2013, the Consumer Financial Protection Bureau (CFPB) published a final rule in the Federal Register implementing the new legislation. The final rule became effective when published on Tuesday. From now on, only the on-screen or printed notice is required. The new rule can be found here.
ATM fees have been increasing lately. Consumers using ATMs not provided by their own financial institution (so-called "foreign" ATMs) typically pay two fees for each transaction. First, the operator of the foreign ATM (which may or may not be a financial institution) frequently charges a fee. A recent survey indicates the average is $2.40. Second, the user’s own financial institution may charge them for using a foreign ATM. That charge averages $1.40, according to the same survey. Therefore, the average total charge for using a foreign ATM is $3.80, up more than 150% from 2004, when the average fee was under $1.50. It should be noted that neither the new rule nor the statute enacted in December 2012 requires an ATM operator to disclose the potential existence or amount of the fee charged by the user's own financial institution. Typically, the foreign ATM operator has no knowledge of that fee. Instead, the user’s financial institution is required to disclose the fee when the account is opened and on a periodic statement if such a fee is imposed. The foreign ATM is only required to provide notice of the ATM operator's fees.
[Primary source: CFPB Regulation and Release at 18221 Federal Register Vol. 78, No. 58,
Tuesday, March 26, 2013.]