With Bi-Partisan Support, Senate Banking Committee Chairman Introduces Bill Combining ATM Fee Notice and CFPB Anti-Privilege Waiver Provisions

by Ballard Spahr LLP

[author: Keith R. Fisher]

On Tuesday July 17, Senate Banking Committee Chairman Tim Johnson (D.-SD) introduced a new bill, S. 3394, which combines two consumer-related regulatory initiatives that had already been separately introduced and passed by the House of Representatives.  These are (1) eliminating one of the automated teller machine (“ATM”) fee notice provisions (so-called “ATM placard regulation”), passed by the House in H.R. 4367, and (2) providing protection for privileged information shared with, or by, the CFPB, passed by the House in H.R. 4014.  Both initiatives have been on the regulatory agenda of the American Bankers Association.

             ATM Placard Regulation

In the Electronic Funds Transfer Act (“EFTA”), subparagraph (A) of Section 904(d)(3)  mandates that regulations thereunder require ATM operators charging fees for providing host transfer services to consumers to provide, at the time the services are provided,  notice to consumers of the fact that a fee is being charged and the amount of the fee.  12 U.S.C. § 1693b(d)(3)(A).  Subparagraph (B) then establishes requirements for such notice and, as currently in force, mandates both that prominent and conspicuous notice be placed on or next to the machine itself (usually done in the form of a printed placard) and that, once an ATM transaction is initiated (but while the customer can still abandon the transaction), notice also appear on the ATM screen.  12 U.S.C. § 1693b(d)(3)(B).

The ATM placard regulation is duplicative, because consumers are already alerted to the nature and amount of the fee on the ATM screen and have the option to decline the transaction without being charged.  S. 3394, like H.R. 4367, would eliminate the placard requirement by amending subparagraph (B) with the following deletions:

                    (B) Notice requirements

 (i) On the machine

 The notice required under clause (i) of subparagraph (A) with respect to any fee described in such subparagraph shall be posted in a prominent and conspicuous location on or at the automated teller machine at which the electronic fund transfer is initiated by the consumer.

 (ii) On the screen

The notice required under clauses (i) and (ii) of subparagraph (A) with respect to any fee described in such subparagraph shall appear on the screen of the automated teller machine, or on a paper notice issued from such machine, after the transaction is initiated and before the consumer is irrevocably committed to completing the transaction, except that during the period beginning on November 12, 1999, and ending on December 31, 2004, this clause shall not apply to any automated teller machine that lacks the technical capability to disclose the notice on the screen or to issue a paper notice after the transaction is initiated and before the consumer is irrevocably committed to completing the transaction.

             CFPB Anti-Privilege Waiver Amendments

             Chris Willis and I have previously blogged on several occasions, such as  here and here, about the “legislative fix” passed in the House and stalled in the Senate earlier in this session of Congress, and, more recently, we issued an E-Alert about the Bureau’s rulemaking to accomplish the same goal by administrative fiat.  S. 3394, in addition to amending the EFTA, is the latest iteration of the two-fold legislative fix.  First, it would amend Section 11(t)(2)(A) of the Federal Deposit Insurance Act to add the Bureau to the laundry list of federal regulatory agencies that may share privileged information with other federal agencies without the privilege being waived.  Second, it would amend Section 18(x) of that Act expressly to include the Bureau with the other Federal banking agencies in terms of insulating from waiver any privileged information submitted by a regulated entity. 

             The bill is co-sponsored by Ranking Member Richard Shelby (R.-AL) and by Senators Sherrod Brown (D.-OH), Mike Crapo (R.-ID), Kay Hagan (R.-NC), Mike Johanns (R.-NE), Diane McCaskill (D.-MD), and Jim Tester (D.-MT).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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