The current burst of lawsuits against credit unions and community banks over alleged compliance violations at their ATMs has snared 44 CUs in 14 states as of June 30, according to CUNA Mutual.
These sorts of lawsuits can allege violations of different aspects of federal or state law, but the 44 that CUNA Mutual is tracking involve alleged violations of Regulation E.
Reg E requires that credit unions and other ATM deployers both post notices on their machines that a fee may be required if a cardholder from another financial institution makes a withdrawal or checks a balance at the ATM. The fee amount also must be disclosed before the cardholder commits to paying for it.
“The lawsuits typically involve missing signage on or at the ATM and incorrect fees disclosed on the sign at the ATM,” said Brad Mundine, CUNA Mutual senior manager of Credit Union Protection Risk Management.
“In addition, many of the lawsuits involve remote ATMs serviced by third-party vendors. Many credit unions involved in the lawsuits erroneously believed the fee notice sign was not necessary since the fee was disclosed on the terminal screen of the ATM,” Mundine said.
As part of protecting themselves from litigation, CUNA Mutual recommended credit unions routinely check their ATMs to make sure they remain compliant and to record those inspections.
In one of the most recent cases, LA Financial CU agreed to pay up to a total of $33,889 at a rate of a maximum of $10 per claim after a suit alleged the CU had violated contract law at its ATMs.