On December 11, 2012, the United States Senate passed H.R. 4367, a bill that aims to put an end to the “viral” EFTA lawsuits that spread across the nation in recent years. If President Obama signs the bill, it will eliminate the current statutory requirement that ATM operators post “on-machine” notices which disclose ATM transaction fees (i.e., a “fee decal”). As amended, the EFTA would require ATM operators to provide just the “on-screen” notices, which require each ATM user to consent to any fees prior to completing any ATM transaction and withdrawing funds, instead of both types of notices.
Representative Blaine Luetkemeyer, one of 145 co-sponsors of H.R. 4367, stated that ending the “fee decal” lawsuits was one of the primary purposes of the bill. When he introduced the bill, which passed the House in a 371-0 vote earlier this year, Luetkemeyer noted that “some individuals have seen the potential to make a quick buck off a frivolous claim and have begun to remove stickers from ATMs across the country, thereby placing financial institutions and merchants out of compliance,” and stated that the bill seeks “to eliminate an outdated and unnecessary regulatory burden facing merchants and financial institutions while continuing to ensure consumer protections for all ATM users through required on-screen fee disclosures.” 158 Cong. Rec. H4665 (daily ed. July 9, 2012) (statement of Rep. Luetkemeyer).
The near end to the fee decal lawsuits comes at a time when the fee decal cases have begun to make their way to federal Courts of Appeals. The Eighth and Ninth Circuit are set to decide critical EFTA questions in the cases of Charvat v. First National Bank of Wahoo and Johnson v. Cardtronics Inc., respectively. Charvat presents the question of whether a fee decal plaintiff has standing to sue over the alleged lack of physical fee notice. The district court in Charvat held that the plaintiff lacked Article III standing because he had seen the on-screen fee notice, and, therefore, had not suffered an injury in fact. In his appeal, the Charvat plaintiff argues that he should still be permitted to seek statutory damages for the alleged violation.
In Johnson, the Ninth Circuit may provide guidance on important statutory defenses available to ATM operators that have been sued over allegedly missing fee decals. The statutory defenses at issue in Johnson are (1) the safe harbor a/k/a vandalism defense and (2) the bona fide error defense. Under the vandalism defense, an ATM operator is immune from liability for a missing fee decal if it can show that it initially affixed the decal but the decal was later removed by a third party, e.g. through vandalism. The bona fide error defense protects operators that may have failed to initially affix a fee decal despite maintaining reasonable procedures designed to ensure compliance, i.e., a violation that resulted from a bona fide error. The Johnson court should provide a rule on the proof that an ATM operator must submit to entitle it to the protection of the safe harbor or bona fide error defenses, and its decision could provide much needed guidance to banks, credit unions, and other ATM operators that continue to face EFTA fee decal lawsuits.
Of course, nothing is more rational than dispensing with the anachronistic fee decals altogether. At least one district court has recognized, albeit in dicta, that common law principles similar to the “self-inflicted injury” doctrine may preclude an ATM user, who knowingly and affirmatively pays a surcharge fee, from complaining that an on-machine, fee decal violates Regulation E:
Anyone who sees the “may charge” notice, and who therefore asserts uncertainty as to whether he or she will in fact be charged a fee, then has the express option to proceed or not to proceed with the withdrawal of funds. If that is indeed so, counsel should be prepared to provide authority as to whether or not the decision to proceed might be viewed as a self-inflicted wound of the type that has long been characterized in the law by the maxim “volenti non fit injuria.”
Mowry v. JP Morgan Chase Bank, N.A., No. 06 C 4312, 2006 WL 2385296, *1 (N.D. Ill. Aug. 11, 2006) (dicta) (Shadur, S.J).
Waller’s Fall 2010 Banking and Financial Services Update discussed the recent trend in EFTA lawsuits against ATM operators.
UPDATE: Pres. Obama has signed H.R. 4367, and so the bill is now law.