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Consumer Financial Protection Bureau Eliminates Dual Notice Requirement Regarding ATM Fees

The Federal Consumer Financial Protection Bureau ("CFPB") recently amended Regulation E, 12 CFR 1005.16 ("Reg. E"), to eliminate duplicative fee notice requirements on ATM machines.  As a result of the March 26, 2013 amendment, banks will no longer be liable for failing to post notice on the ATM machine of a user fee for non-customers of the bank, even though a more specific warning is provided on the screen before an ATM transaction can be completed.

Originally enacted in 1999 as an amendment to the Electronic Funds Transfer Act, 15 U.S.C. ยง 1693(b)(d)(3), and first enforced in 2004, the dual-notice requirement mandated that a bank provide:  (i) a general notice, posted on the side of the ATM machine that a fee could be imposed for using a non-proprietary machine, and (ii) a more specific notice, appearing on the screen, of the amount of the user fee.

Beginning in 2004, banks across the country faced a wave of individual and purported class action suits predicated on allegations that the defendant bank did not have the required notice posted on the side of its ATM machine.  Under the EFTA and Reg. E, the consumer plaintiffs did not need to show that they actually suffered a loss in order to recover statutory damages.

The flood of class action litigation ultimately caught the attention of Congress. HR 4367 was passed by Congress on December 11, 2012 and President Obama signed it thereafter.  The CFPB then formally amended Reg. E to eliminate the dual fee notice requirement.  While the amendment is a welcome development for banks, it is not retroactive, and does not apply to cases that have already been filed in court.

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