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Michigan Credit Union League Home » Information Services » Publications » News Articles  

ATM Signage Lawsuits Continue, CUNA Reaffirms Best Practices   (Misc News: December 22, 2011)

In the wake of a new wave of lawsuits against credit unions for failing to properly disclose ATM fees, CUNA says there are steps every credit union should take to lower the risk of being sued.

The recent lawsuits were filed by a New York resident, Don Anderson, against credit unions and banks in Texas and Louisiana.  The lawsuits allege violations of the disclosure provisions of the Electronic Funds Transfer Act, also known as the Federal Reserve Regulation E. 

According to CUNA, the lawsuits typically involve missing signage on or at the ATM and/or incorrect fees disclosed on the sign at the ATM. Additionally, many of the lawsuits that have been filed involve remote ATMs serviced by third-party vendors. 

CUNA says these lawsuits can be avoided by inspecting the ATMs regularly to ensure the fee sign is intact. Because the signs are sometimes removed or defaced by customers, CUNA says credit unions do not need to place the precise fee amount on the sign itself, since the regulation does not require the amount of the fee to appear on the sign.  

CUNA further recommends that credit unions take the following proactive steps to mitigate risk on this issue:

•    Develop and maintain written procedures for inspecting all of the credit union’s ATMs on a regular basis to ensure the ATM fee signs are intact.  ATMs should be inspected at least weekly or when the ATM is serviced – whichever provides for more frequent inspections.
•    Consider photographing the ATM each time it is inspected for the signage, maintain a log to track all ATM inspections, and have management review the log periodically to ensure accuracy.  The log should contain at least the following information:

o    ATM location inspected,
o    Date of inspection,
o    Status of ATM fee sign/notice (missing or present),
o    Action taken (e.g., replaced sign, etc.), and
o    Initials or name of employee performing the inspections.

•    When using a third-party vendor for servicing ATMs, credit unions should require the vendor, either by contract or through a maintenance agreement, to inspect the ATMs for the fee signage.
•    Missing signage should always be replaced immediately.

To ensure ATMs meet Regulation E’s signage requirements, CUNA says credit unions should do the following:

•    Maintain a supply of signs/stickers to replace any that have been defaced or removed from ATMs;
•    Periodically test the ATMs using a non-credit union-issued ATM network card or debit card to confirm the fee appears on the screen and on the transaction receipt;
•    Consider placing a general signage notice on the ATM stating: “A fee will [or may or specify transactions to which a fee will apply, if applicable] be imposed for providing electronic funds transfer services [or a balance inquiry];”
•    Confirm ATM fees are properly disclosed on the ATM machine, on the screen, and on the transaction receipt;
•    Ensure ATM fee notice signs are not damaged or removed during ATM remodeling projects and if that is not possible, place the fee notice sign in a temporary alternate location on or at the ATM in a prominent and conspicuous manner. The sign should be returned to its permanent location once remodeling is complete.

CUNA has also contacted the Consumer Financial Protection Bureau, urging the bureau to suspend a duplicative ATM notice requirement in an effort to help stop these lawsuits. Current regulations require both a sign at the ATM and a notice on the ATM screen before completing the transaction.

For more information on the issue of ATM lawsuits and disclosure requirements, click here for the Michigan InfoSight Compliance update.

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