House Financial Services Committee members Blaine Luetkemeyer (R-Mo.) and David Scott (D-Ga.) on April 17 introduced legislation (H.R. 4367) that would protect banks and credit unions from frivolous lawsuits by repealing the outdated requirement that a placard must be attached to ATMs stating that a fee may be charged.
The placard disclosure is duplicative because the actual fee also appears on the ATM video monitor before the transaction is completed. But if the placard isn’t attached, Regulation E (Electronic Funds Transfer Act) permits successful class-action plaintiffs to recover the lesser of $500,000 or 1 percent of the ATM operator's net worth plus attorneys’ fees and costs.
As a result, some people have removed placards, photographed ATMs without them and filed lawsuits.
In a February letter, ABA and six other trade groups asked the House Financial Services and Senate Banking Committees to pass a bill repealing the placard requirement because such lawsuits were growing precipitously and could reduce both the number of ATMs and consumer convenience.
This is a bill that both banks and credit unions can support.
Read the letter.
Read the bill.
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Rather than supporting this Congressional approach, the matter is better "fixed" by CFPB rule making. The reason? At the same time the CFPB can attach the "fix" for banks that are currently aggressively seeking out and courting individuals they believe to be low-income customers and steering them into exceptionally high rate, high fee debit cards when other products are available. Many of the bank cards charge a fee for using an ATM on top of the ATM fee. The Underbanked are often vulnerable customers, and the pattern of bank target marketing these abusive products might remind officials at CFPB of recent bank predatory mortgage lending practices as well as other actions that led to the 2008 United States Banking Crisis with the resulting creation of the CFPB itself. Congress created the CFPB to deal with these related sets of issue, The chronic moral hazard problems seem to be at banks, not credit unions. Credit unions and banks need not agree that Congress is the only path for fast resolution of this ATM fee signage problem.
ReplyDeleteYour rant does snot match what was discussed.The CFPB should have never been set up. It was done by the Democrats when they controlled the House and Senate. Obama appointed the leader in recess. Perhaps when Rommney is President he will have the sense to dismantle and get rid of this horrible agency that is causing so much harm to not only the financial community but also the American people.
DeleteDoesn't the bank/credit union deserve to get reimbursed for the fee charged when the consumer uses the ATM card at a foreign ATM? Why should all consumers pay for those expenses for the benefit of a few?
ReplyDeleteThe issue with this problem is two separate legal requirements that only Congress can address. Just like only Congress can change the out-of-date (aka stupid) law that limits overdrafts to six per calendar month.
A few select credit criminals are traveling the USofA not for national monuments to tour but ATM's to photograph without proper signage. Next stop is the Class Action Lawsuit Attorney. The law should be repealed. The ABA, CUNA & NAFCU should be on this like a knife through hot butter. The video monitor displays the fee & allows the consumer to cancel the transactione to avoid the fee. REPEAL THE LAW it is irrelevant and only promotes lawsuits to the benefit of the attorney and of precious little benefit to the consumer. So what else is new?
ReplyDeleteGood thing is banks and credit unions are working together to repeal this outdated law. Congrats to the trade associations putting other issues aside for the common good.
DeleteRight on!
DeleteThank you Keith for posting an article that shows banks and credit unions working together. While there are valid points for argument between the two entities, the only individuals profiting from the differences seem to the the lobbyists and Congress who have a financial interest in our disagreements.
ReplyDeleteEveryone is right, there are opportunists roaming the country peeling ATM fee disclosure stickers off ATM machines so they can file a missing-signage lawsuit. And two known ways to fix, via statutory change in Congress or via rulemaking at CFPB. Having the CFPB also fix related problems is interesting because of the outcry over some aggressive banks creating synthetic payday lending style programs under their bank charter to avoid payday lendings' rate restrictions; creating a special interface with a high-rate debit/ATM card to keep this class of customer out of their lobbies; seeking out individuals who are unbanked low income or inexperienced and selling them the highest cost system to access their own money without disclosing more affordable products are available from the same institution, and target marketing low wealth people with few other options to make the sales — basically the newest form of bank red-lining. Shows why the CFPB was necessary and why CRA was created for predatory banks in the past. Fix all banking problems, fast. Lawsuit seekers shouldn’t be preying on banks over missing ATM information. Likewise, banks need not prey on the public.
ReplyDeleteYou can't fix dumb. Consumers too stupid to recognize they are being ripped off on a retail sale or a bank fee will never be saved by way of Congress and Regulations. Life is not always fair. Deal with it. The free market society permits people to seek out predatory payday lenders, pawnshops, and lottery tickets. None of these are good value propositions. No bank held a gun to the consumer and forced them against their free will to sign a sub-prime interest only pick a payment real estate loan. These people did it of their own free will. They placed a bet thinking they could flip the house and make a buck. Guess what? They lost the bet and the house, too. If people see the sign and agree to pay the ATM $10 fee for a $20 cash out transaction more power to them. But to permit these pseudo-attorney class action idiots to file lawsuits because the sign was missing when it was displayed on the monitor is just plain out wrong.
ReplyDelete