WASHINGTON – The House Financial Institutions Committee on Wednesday is widely expected to endorse a bill that would cut down the growing number of class action suits against credit unions and banks by eliminating one of the two disclosures on fees charged non-members required at ATMs.

The bill is expected to pass the full House, but may run into more difficulties when it reaches the Senate, as it is has broad opposition by consumer groups who see the physical placard required on ATMs as an important consumer protection.

The bill would amend some provisions of the Electronic Funds Transfer Act, also known as Reg E, which was monitored by the Federal Reserve and now is overseen by the Consumer Financial Protection Bureau.

The effort comes as credit unions are facing a growing number of consumer class action lawsuits over the EFTA, including allegations of violations of the Americans With Disabilities Act and regarding overdraft fees.

Ryan Donovan, chief lobbyist for CUNA, on Monday said credit unions believe the single, on-screen disclosure regarding fees is adequate protection for consumers, and the second disclosure, the placard, is unnecessary.

Meantime, CUNA is lobbying the Consumer Financial Protection Bureau, which CUNA believes has the legal authority to eliminate the requirement for the placard without legislation. CUNA lobbyists were meeting with CFPB representatives yesterday to press their case.

The absence of a placard has invited a growing number of class action suits – as many as 500 against credit unions and banks – by consumers claiming they were not properly informed of the fees.

NAFCU on Monday told leaders of the House panel the bill would help eliminate such suits. “This statutorily prescribed bounty has created a strong incentive for spurious lawsuits,” said Dan Berger, chief lobbyist for NAFCU, in a letter to committee leaders. “It has led to situations where the placard notice affixed to the ATM has been removed and, before the ATM operator is aware of the missing placard, litigants have photographed the ATM without the placard notice and filed suit.”

“The repeal of the outdated signage provision will stop the flood of frivolous litigations and cause no harm to consumers,” wrote Berger. “Without relief, the number of baseless lawsuits will continue to rise, as will the cost of this service to consumers. Such actions could very well reduce the number of ATMs deployed and result in reduced consumer convenience.”

 

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