CUNA Regulatory Comment Call
August 29, 2005
ATM DISCLOSURE NOTICE
EXECUTIVE SUMMARY
- The Federal Reserve Board issued a proposed amendment to Regulation E to permit ATM operators to state that a fee “may” be imposed rather than “will” be imposed if there are circumstances under which some consumers would not be charged for services.
- Currently, an ATM operator must post notices at ATMs that charge fees for initiating a transaction.
- ATM operators must still provide the consumer with a separate notice, either on the screen or the ATM or on paper, that a fee will be imposed and the amount of the fee, before the consumer is committed to paying the fee.
- This option would not be available to credit unions who do not charge a fee for their own members, but charge nonmembers for using their ATM, but rather for those credit unions that have circumstances in which certain nonmembers would not be charged.
- Please submit your comments to CUNA by September 26, 2005. Comments are due to the Federal Reserve by October 7, 2005.
Please feel free to fax your responses to CUNA at 202-638-7052; or e-mail them to Associate General Counsel Mary Dunn at mdunn@cuna.com or to Assistant General Counsel Lilly Thomas at lthomas@cuna.com; or mail them to Mary or Lilly c/o CUNA’s Regulatory Advocacy Department, 601 Pennsylvania Avenue, NW, South Building, Suite 600, Washington, D.C. 20004.
BACKGROUND
The Federal Reserve Board (Board) issued a proposal in September 2004 as part of an update to Regulation E. It proposed to revise the official staff commentary to clarify that ATM operators may disclose on the ATM that a fee may be imposed or specify the type of transaction or consumer for which a fee is imposed, if there are circumstances in which there would not be a fee charged for a particular transaction.
After reviewing comments, the Board believes it would be appropriate to make this clarification in the regulation rather than in the commentary. Therefore, the Board is withdrawing its proposed commentary revisions addressing this issue and is issuing this proposed rule and commentary to elicit additional comments.
DISCUSSION
The Board issued a proposal to amend Regulation E, which implements the Electronic Fund Transfer Act (EFTA), and the official staff commentary to the regulation to clarify the disclosure obligations of ATM operators.
Currently, Regulation E requires an ATM operator that imposes a fee for initiating a transaction to post notices in a prominent and conspicuous location on or at the ATMs at which a fee will be imposed. This proposal would revise the regulation to clarify that the notice can state that a fee may be imposed, rather than will be imposed, if there are circumstances in which an ATM fee will not be charged for a particular transaction.
This notice is not intended to represent a complete disclosure to the consumer about fees, but gives consumers the ability to know immediately which ATMs generally charge a fee for use. In addition to this notice, a more detailed disclosure of whether a fee will be charged and the amount of the fee is required on the ATM screen or receipt before the transaction is completed.
An ATM operator is defined as anyone who operates an ATM at which consumers initiate a transaction, but does not hold the account to or from which the transaction is made. Therefore, this option would not be available to credit unions that do not charge a fee for their members, but charge nonmembers for use of the ATM. However, credit unions that do not charge nonmembers for some transactions, such as a balance inquiry, but charge for other transactions, such as a transfer or withdrawal, would have the flexibility to state that a fee may be imposed. Credit unions that do not charge nonmembers who carry cards that are issued under electronic benefit transfer (EBT) governmental programs, or members of other credit unions that participate in a shared ATM network may also use this disclosure.
This proposal would not change the notice requirements for credit unions that impose an ATM fee in all cases or that do not impose an ATM fee at all. Those credit unions that charge a fee to all nonmembers must still provide notice that a fee “will” be charged. A sign is not required if no fee is charged for ATM use.
QUESTIONS REGARDING THE PROPOSAL
- Currently, under what circumstances is an ATM fee not charged to non-members? Please provide examples of the types of transactions (such as a balance inquiry) or types of non-members (such as any individual who uses an EBT card) that are not charged for ATM usage.
- If there are circumstances in which non-members are not charged, how do you currently disclose your ATM surcharge practices?
- Do you believe that disclosing that a fee “will” be imposed, when it may not be imposed has an adverse impact on consumers? If yes, in what way?
- Do you believe that disclosing that a fee “may” be charged will have an adverse impact on consumers who are ultimately charged a fee? If yes, in what way?
- Do you have any additional comments on issues not raised in this Comment Call?
|
Eric Richard • General Counsel • (202) 508-6742 • erichard@cuna.com Mary Mitchell Dunn • SVP & Associate General Counsel • (202) 508-6736 • mdunn@cuna.com Jeffrey Bloch • Assistant General Counsel • (202) 508-6732 • jbloch@cuna.com Lilly Thomas • Assistant General Counsel • (202) 508-6733 • lthomas@cuna.com Catherine Orr • Senior Regulatory Counsel • (202) 508-6743 • corr@cuna.com |
