ATM fee-disclosure class-action suits on the rise
Restaurants with an on-site ATM machine should ensure postings notifying customers of fees are posted both on the screen during a transaction, as well as on the machine itself, or risk being vulnerable to a lawsuit, said Gregory Hurley, an attorney with Irvine-based firm Greenberg Traurig, in a statement.
“There is a burgeoning cottage industry of professional plaintiffs who target banks and businesses housing ATMs with class-action lawsuits alleging the failure to comply with notice requirements imposed by the Electronic Fund Transfer Act (EFTA),” the statement said.“Avoiding these suits is simple,” Hurley said. “All you have to do is post signage on or near the machine. The fee notices on the ATM screen are NOT enough - there must be physical signage too.”An ATM operator who fails to provide the required notices may be held liable for statutory damages, actual damages, attorneys’ fees and costs.The law requires that an ATM operator must “provide notice that a fee will be imposed for providing electronic fund transfer services or a balance inquiry, and disclose the amount of the fee.” This includes two notices at each terminal: one on the machine, and the other on the screen or on paper.An on-machine notice must “be posted in a prominent and conspicuous location on or at the automated teller machine” and state that there “will” or “may” be a fee. The difference in the terms “will” and “may” reflects whether there are circumstances where the operator would not impose such a fee for use of its ATM. A common application of using “may” would be a network member not applying a surcharge to other network member cardholders. There is no requirement to disclose the actual fee amount with this notice.The second notice must be displayed either by showing it on the screen of the automated teller machine or by providing it on paper before the consumer is committed to paying a fee. The fee amount must be stated within this notice. An ATM operator that imposes a fee for a specific type of transaction such as a cash withdrawal, but not a balance inquiry, may provide a general statement that a fee will be imposed for providing electronic fund services or may specify the type of electronic fund services for which a fee is imposed. The specific content of each notice is not addressed.“If you find an ATM on your premises that is missing signage just print out the language in the Alert and tape it to the machine until you can get a more permanent sticker,” Hurley said. “Under most ATM location agreements, you, and not the ATM owner, are liable and must indemnify the ATM owner for these suits.”
Greenberg Traurig provides some sample wording:
On the machine notice:
“The owner of this ATM may charge a fee for withdrawing cash. The amount of the fee will be displayed on the ATM screen. This fee is added to the amount of your withdrawal and is in addition to any fee that may be charged by your financial institution.”
On the screen notice:
“The owner of this ATM will add a convenience fee of $X for this transaction. This fee is in addition to any fee your financial institution may charge. Would you like to continue this transaction?”
Take steps to minimize liability.
The recent increase in lawsuits have been filed against banks, as well as against merchants who house ATMs, including hotels, restaurants, sports venues and retail establishments. Though liability is imposed on “ATM operators,” little case law exists to determine whether this includes a merchant housing an ATM.Until there is more guidance, merchants with ATMs on their property should have an agreement with the ATM owner that expressly places the responsibility for regulatory compliance on the ATM owner and provides for indemnification in the event that the business is sued.To further mitigate risk, businesses should confirm that all ATMs on their property bear the appropriate notices and should photograph them for documentation, as well as adopt a policy to periodically inspect the notices. The law specifically provides an exception to liability where an ATM operator posts a proper notice and this notice is subsequently removed, damaged or altered by someone other than the operator. Courts have dismissed claims under this exception where an ATM operator has submitted evidence showing that a proper notice was on the ATM at one time. The law also specifically provides that ATM operators may not be held liable if they can show that a violation was not intentional and resulted from a bona fide error.For more information, contact Gregory Hurley at 949.732.6614 or HurleyG@GTLaw.com.