WASHINGTON (6/20/12)--Current ATM disclosure requirements are creating issues for credit unions, and preventing those credit unions from more fully serving their members, Credit Union National Association (CUNA) Senior Vice President of Legislative Affairs Ryan Donovan said in The Hill.
Portions of Regulation E require credit unions and other financial institutions that provide ATM services to display a physical notice on the ATM that a fee will be charged. Fee notices are also displayed on the ATM screen.
Donovan estimated that credit unions are spending around $2,000 per ATM machine to comply with the physical ATM notice requirement. "If a credit union is spending — as in this case — $2,000 to comply with a regulatory requirement that doesn't benefit the consumer, that comes as a cost to them. We can't use that $2,000 to make a loan to them," Donovan added.
Credit unions and others have also been subject to frivolous lawsuits as a result of the dual-disclosure requirement. CUNA has noted that outside notices on ATMs are, in some cases, being intentionally removed or destroyed, without the financial institution's knowledge, and that pictures are then taken of the ATM to show noncompliance. Some ATM users may then use this as evidence of apparent non-compliance and as grounds for lawsuits, and the number and cost of these lawsuits continues to climb.
CUNA recently estimated that the total number of these lawsuits could be in the hundreds, and many credit unions are settling the suits to avoid the cost of litigation.
Legislation that would help credit unions and others by easing these ATM regulations is scheduled to be discussed during a June 27 House Financial Services Committee markup session. The ATM bill, known as H.R. 4367, was introduced by Reps. Blaine Luetkemeyer (R-Mo.) and David Scott (D-Ga.) in April. It has 106 cosponsors.
However, as noted in The Hill, Consumers Union, Consumer Action and the U.S. Public Interest Research Group (PIRG) have urged members of Congress to oppose ATM disclosure relief legislation. The consumer groups are concerned that consumers could engage in an ATM transaction without knowing the full extent of fees that could be charged if the disclosure placards are removed. They have also suggested that the ATM issue should be addressed by regulators, not legislators.
CUNA's intention has not been to reduce disclosure or consumer information, but rather to ensure that credit unions are able to efficiently use the resources of the credit union to the benefit of the member, Donovan said earlier this month. CUNA has also urged the Consumer Financial Protection Bureau to use its own authority under the Dodd-Frank Wall Street Reform Act and the Electronic Fund Transfer Act to amend Regulation E and eliminate the requirement for on-machine ATM fee disclosure notices.