ATM fee notice litigation picks up the pace
Banks – particularly community banks – may anticipate a flurry of new ATM fee notice lawsuits in the next few weeks, as Congress adjourned for its August vacation without amending the federal Electronic Fund Transfer Act (EFTA) to do away with the requirement that a fee notice must be physically attached or adjacent to the outside of each ATM, in addition to the onscreen fee notice. Last week alone, at least three new class action lawsuits were filed against Alabama banks in federal court in Birmingham. All were filed by the same attorney in the name of the same plaintiff who alleges he is a New York resident.
The bill to amend the EFTA is expected to pass when Congress returns in September; although, it is not without opposition from several national consumer groups. In the meantime, so-called “lawsuit trolls” are racing the clock to locate as many non-complying ATMs as possible. They travel across the country, searching for ATMs that do not have the physical fee notice externally attached. When they find one, they use the ATM in a transaction in which a fee is charged by the bank that operates the ATM, take a cell phone photo of the ATM, and file a lawsuit against the bank. In the lawsuits, the plaintiffs claim the EFTA statutory maximum of the lesser of $500,000 or 1% of the bank’s net worth on behalf of a class of persons who used the ATM while there was no fee notice on it, plus court-awarded attorneys’ fees and court costs.
As a result, banks should be especially diligent during the coming weeks – and thereafter if Congress does not repeal the requirement for the external fee notice – to ensure that the required ATM fee notice is affixed to each of their ATMs at all times. Any notice that is not firmly attached should be secured. ATMs should be inspected daily or more often, and any missing ATM fee notice should be replaced immediately and the replacement date and time documented. Security photos should be examined to try to determine when the fee notice was removed and by whom. Any evidence of intentional removal should be retained. Additionally, each ATM should be tested to confirm that all ATM users are offered the onscreen fee notice and opportunity to exit the transaction before the fee is imposed.
We are defending several of these ATM fee notice class actions. If you face one of these lawsuits, keep in mind that the absence of actual injury from these alleged fee notice violations presents potential constitutional standing defenses that may be raised in a pre-answer motion to dismiss.