Imagine this- banks and shopkeepers make a business out of providing a convenient way for people to access their cash on the go by providing ATMs. The ATM operators charge a small per transaction fee for the use of their equipment. The technology built into the ATM machines does not allow a user to proceed with a transaction without first consciously accepting an on-screen electronic prompt that details the transaction fee that the customer is being assessed. If the customer does not agree to pay the fee, he or she can cancel the transaction without being assessed any fee. Nonetheless, a federal statute also requires that a physical notice of the same fee be posted at the ATM terminal. As the law exists today, the absence of the easily removable physical form of notice can subject the ATM operator to costly statutory liability that includes attorneys’ fees. That frequently litigated redundancy is on the precipice of being eliminated for good.
Last week, the United States Senate unanimously approved Senate Bill S. 3204, repealing the dual ATM signage component of the Electronic Fund Transfer Act, 15 U.S.C. §1693, et seq. (“EFTA”). The House of Representatives already unanimously approved its version of the bill this past summer. This is a relief to ATM operators of all kinds, whether they are independent service providers, big banks, or small credit unions.
This ill-fated liability provision of the EFTA has been the source of much indignation by ATM operators. Opportunistic plaintiffs’ attorneys have used the provision to elicit per transaction statutory damage awards ranging from $100 to $1,000 per transaction, along with statutory attorneys’ fees, from ATM operators lacking both duplicative forms of notice.
The perversion of the EFTA’s dual ATM fee notice provision into a revenue source for some did not go unnoticed by the bench. In substantially diminishing one statutory attorney fee award under the EFTA, United States Magistrate Judge Lois Bloom of the United States District Court for the Eastern District of New York characterized one ATM fee notice plaintiff attorney’s conduct as “simply filing a single document in multiple actions[.]” Archbold, et al. v. Tristate ATM, Inc., et al., 2012 U.S. Dist. Lexis 127654 at *7 (E.D.N.Y. September 7, 2012). On her way toward recommending the statutory minimum damage figure be assessed against the ATM operator, Magistrate Bloom also aptly noted in Archbold that:
Through serial transactions conducted at ATMsthat lack the EFTA-required signage (whether due to the ATM operator's failure or to the strategic removal of the physical fee notice), plaintiffs can manufacture claims, file suit in federal court, and either collect the statutorily-mandated damages and fees or exact a settlement offer.
Id. at *4
Industry groups advocated heavily for reform, and Congress listened. All that remains is for President Obama to sign the bill into law. In the meantime, the bill’s passing and decisions like Archbold may provide opportunities to negotiate what remains of these statutory claims away on behalf of defendants for nuisance value settlements.