After dozens of cases have been filed nationwide, Texas financial institutions are now being sued for allegedly deficient notices about fees on ATMs. The Electronic Funds Transfer Act (EFTA) allows a court to award, in some cases, up to $500,000 in class action lawsuits. Since the beginning of August, these sorts of class action cases have been filed against banks and other financial institutions in federal courts in Texas. Although most ATMs are compliant with the "on the screen" notice requirement, these cases have focused on the "on the machine" requirement that a consumer be notified that a fee will be charged for using ATM services.
The Electronic Funds Transfer Act (15 U.S.C. § 1693) requires any ATM operator to give notice (1) that a fee will be imposed for using the ATM and (2) of the amount of any such fee before imposing a fee on any consumer. This notice must appear on the ATM screen, or on a paper notice issued from the ATM, after the transaction is initiated and before the consumer is irrevocably committed to completing the transaction. ATM operators must also post a notice in a prominent and conspicuous location on or at the ATM. Only having the notice on the screen is not enough and could expose ATM operators to liability.
An ATM operator who fails to adhere to these requirements may be liable for any actual damage sustained by a consumer as a result of such failure plus a statutory penalty of $100-$1000. In the case of a class action, an ATM operator may be liable for the lesser of $500,000 or 1% of the net worth of the operator (as well as court costs and "a reasonable attorney's fee as determined by the court").
Cases have been filed nationwide, but recently, class action lawsuits are being filed in Texas against banks. The primary complaint in cases—at least 7 of which have been filed in federal court in Houston and over 20 of which have been filed in federal court in Dallas—has been the allegation that the ATMs lacked the "on the machine" notice. It appears that after filing the lawsuit, the plaintiff's attorneys will seek to use the operator's records to find other members of the class that might also have used an allegedly non-compliant ATM and been charged a fee without the "on the machine" notice. There is a one-year statute of limitations for these claims, so an operator could be liable for all such transactions going back as far as one year from the date the lawsuit is filed.
All ATM operators are advised to make sure that their ATMs provide notice to consumers on both the machine and on the screen (with the opportunity for the customer to opt-out before a fee is charged) if a fee will be charged for providing the ATM service.
Although the EFTA imposes a strict liability standard on ATM operators, there are certain defenses that may be applicable to certain operators. It is important, therefore, for ATM operators who have any concerns about their "on the machine" or "on the screen" fee notices to discuss their specific issues with an attorney who may be able to help guide them through the EFTA and its intricacies.