House set to ease rules requiring banks to warn consumers of ATM fees

The House is expected to approve legislation early this week that would relax current rules requiring banks to warn customers about ATM fees.

Under current law, ATM units must bear physical signs explaining the fees that could be charged, and also provide on-screen alerts about fees. But under a bill from Reps. Blaine Luetkemeyer (R-Mo.) and David Scott (D-Ga.), banks would only have to provide this information on the ATM screen.

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The legislation, H.R. 4367, is supported by groups like the American Bankers Association (ABA), the Credit Union National Association (CUNA), and the National Association of Federal Credit Unions (NAFCU), which argue that current law can lead to fines against banks if they do not have physical signs describing the fees on ATM machines. These groups argue that this requirement has set up frivolous lawsuits against banks by people who purposefully remove these signs.

ABA said current law allows customers to recover up to $500,000, plus attorney fees and costs.

"As a result, many placards have been purposely removed in order to sue, or threaten to sue, financial institutions and merchants for non-compliance with the requirement," the ABA wrote to members of the House Financial Services Committee in late June.

NAFCU also wrote to Financial Services Committee leaders last month to the support the bill, and said its more than 800 credit union members are seeing a spike in frivolous suits.

"Over the last 18 months, both the number and cost of these lawsuits have risen precipitously," the group wrote. "If unchecked, these lawsuits will threaten the economic viability of ATM operators and may result in reduced consumer convenience."

"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 said in April. "CUNA recently estimated that the total number of these lawsuits could be in the hundreds."

The ABA said the "dual-disclosure requirement" made some sense in the 1990s, when people were less aware that fees might be charged for using ATMs from banks other than their own bank. But the group said people are now more aware, and ATM screens are now more advanced, making the physical signage unnecessary.

"Today, offsite ATMs have become common, consumers are more aware that fees may be charged at ATMs not operated by their financial institutions, and ATM video monitors are much larger, more prominent, and display sharp images," the ABA wrote.

The legislation is one of seven suspension bills that the House is expected to debate Monday, and possibly vote on Monday or later in the week.

— This story was updated at 3:18 p.m.