December 29, 2011
Earlier this month, Don Anderson, a resident of New York, filed a wave of lawsuits against credit unions and banks in Texas and Louisiana alleging violations of Regulation E. Under Reg. E, credit unions that charge a fee for non-member automated teller machine (ATM) transactions must have a sign that a fee will or may apply and must disclose the fee on the screen or on a paper notice before the consumer is required to pay the fee. In addition, the amount of the fee must appear on the receipt provided.
Violation of these provisions of Reg. E could result in a fine of up to $500,000, plus costs and attorney fees based on a class action filing.
Usually, the lawsuits involve missing signage and/or incorrect fees disclosed on the sign. Many of them have involved ATMs at remote locations managed by third-party vendors. Regular inspection of the ATM to be sure the fee sign is intact will help prevent these lawsuits. Often times the signs are removed or defaced by consumers.
It is important to note that the sign need not have the amount of the fee. In fact, if possible, the Northwest Credit Union Association (NWCUA) recommends that signs not disclose the amount of the fee so that if a change in fee structure occurs, physical signs will still be accurate. If current signs do disclose a fee amount, be sure that amount is accurate.
The NWCUA suggests implementing a policy of regular ATM inspections, possibly including photos to ensure compliance. Records should be kept as to the status of all ATMs and any actions taken. The NWCUA has developed a sample log, available in the resources section of InfoSight.
In addition to a physical inspection, the NWCUA compliance department suggests testing with a non-credit union-issued ATM card to be sure that the proper disclosures appear both on the screen and on the transaction receipt.
Questions? Contact the Compliance Hotline: 1.800.546.4465, firstname.lastname@example.org.