News & Info for Northwest Credit Unions
From Northwest Credit Union Association

Log with Photos of ATM Helps Credit Union Win Reg. E Lawsuit

A federal judge in Harrisburg, Pa., dismissed a lawsuit that had alleged a credit union violated the Electronic Funds Transfer Act with improper ATM fee notification, ruling that a third party had removed the credit union’s posted notice illegally.

A federal judge in Harrisburg, Pa., has dismissed a lawsuit that had alleged a credit union violated the Electronic Funds Transfer Act (EFT) with improper ATM fee notification, saying in his ruling that the credit union showed undisputed evidence that an unknown third party had removed its posted notice illegally.

U.S. District Judge Robert D. Mariani’s ruling cited affidavits and photographs that indicated the credit union posted a compliant fee notice to the ATM in 2006, that none of the credit union's employees removed the ATM fee notice, and that when employees discovered the sticker was missing during a routine examination of the machine, they promptly affixed a new notice to the ATM.  The Judge cited section 1693 of the U.S. Code, which says that if the required ATM notice has been posted by the operator in compliance with the law and the notice is subsequently removed, damaged or altered by any person other than the operator of the machine, the operator has no liability.

The credit union testified that it initiated procedures in February 2011 to provide for routine inspections of its ATMs to ensure the compliant notices were posted. On May 12, 2011, an employee noticed the machine did not have a properly affixed fee notice and replaced it and other signage on the ATM and photographed the machine. After the complaint was served, another employee photographed the machine on Aug. 9, 2011, and the photo showed old adhesive next to the existing fee notice, which showed an earlier fee notice had indeed been affixed.

"These affidavits present facts, which if unrebutted, require a finding that some third party, and not the defendants, removed the required fee notice from the ATM," said the judge's ruling.  Plaintiff failed to offer evidence that would cast doubt on the defense and did not offer a rebuttal beyond merely stating the factual allegations from his original complaint. "Plaintiff's papers and submissions to this court fail to provide any evidence rebutting [the credit union's] defense beyond the assertion that the ATM did not contain the appropriate fee notice. Such submissions do not constitute evidence of a disputed fact."

In the past two years, there has been a spike in the number of lawsuits filed by individuals against more than three dozen credit unions and banks based on missing ATM fee notifications. Some plaintiffs travel the country looking for ATMs without the proper notices attached, take photographs, and sue several financial institutions.  Last year, the Northwest Credit Union Association (NWCUA) created an ATM log for credit unions to use in their ATM audits.  It can be found on the Resources page of InfoSight.

 

Questions? Contact the Compliance Hotline: 1.800.546.4465, compliance@nwcua.org.

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