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Dismissal of ATM disclosure suit provides lessons
NEW YORK (8/6/12)--A federal court's dismissal in New York of a cookie-cutter ATM surcharge-disclosure lawsuit related to a credit union's ATM shows other credit unions how being prepared and in compliance helped the credit union win its case.

The class-action lawsuit was filed in the U.S. District Court for the Eastern District of New York, Brooklyn, by Brooklyn resident Yehudah Katz against Atlanta, Ga.-based Delta Community CU.

The credit union owns an ATM at La Guardia Airport in New York that Katz allegedly used on Feb. 15, according to court documents.  His complaint, filed March 9, alleged the ATM had no external notice of the fee and was in violation of the Electronic Funds Transfer (EFT) Act.  He was charged $2.50 after agreeing to the machine's on-screen ATM disclosure.

U.S. District Court Judge William F. Kuntz II dismissed the case on July 25 "with prejudice, and on its merits, as to the named plaintiff only and without costs as to either party as against the other." The ruling did not state his reasons for the dismissal.

The Credit Union National Association has urged credit unions to be prepared to prove their compliance with the EFT Act  in the wake of multi-lawsuits filed by a few individuals suing banks and credit unions in several states for not having external notices posted on their ATMs.  The ATMs typically have an on-screen notice of the surcharge fees and give consumers the option of not incurring the surcharge by backing out of the transaction.

The multiple law suits use a similar template for unrelated cases. For example, the complaint document in this case involved a male plaintiff but referred to both "himself" and  the "plaintiff, on behalf of herself."

In its response to the lawsuit, the credit union provided photos of the machine taken by Automated Teller Accessories Corp., doing business as ATA Services, which services the ATM for the credit union.  Their agreement provides for ATA to provide photos and proof of notices, logos and signage and to check for, and immediately report, missing stickers and vandalism.  "No such report was received by the credit union respecting the ATM in question," said court documents filed.

The credit union's response also pointed out that the plaintiff voluntarily "consented to the fee by accepting it in response to the on-screen notice of the fee and had the opportunity to cancel the transaction without incurring the fee but chose not to do so."  It cited the principles of waiver, ratification and estoppel on the grounds that the plaintiff voluntarily incurred the fee.

The nuisance lawsuits have prompted legislation in Congress that would ease burdensome ATM fee disclosure regulations that have created legal and financial issues for many credit unions. A bill that would require disclosures only on an ATM's screen is working its way through the Senate.


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