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Legislation to Limit Credit Union Liability for ATM Fee Notices

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A new potential law could mean that credit union ATMs are no longer required to have a physical placard notifying users of the possibility of fees. Yesterday, the Senate unanimously passed H.R. 4367, after it was previously passed by Congress. The amendment to the Electronic Fund Transfer Act now just requires President Obama’s signature to become law. This legislative action seems at first-glance like a step backwards in transparency for consumers, however the full story is a bit more complicated.

The bill’s intent is to reduce frivolous lawsuits brought against credit unions for not properly displaying the appropriate signage.  The Credit Union National Association (CUNA) argues that credit unions should be protected from such lawsuits because of the nature of ATM operation. ATMs are often located off credit union premises, which makes maintenance and upkeep difficult, especially in the case of what is clearly vandalism (removing posted signs).

The damages that credit unions might otherwise be forced to incur for a stolen ATM sign could hurt consumers as well. Credit unions serve their local communities and are much smaller than the big banks, so any losses due to litigation could mean a decline in available services and benefits for members. While the amendment may mean that credit unions are not liable for the lack of a posted fee notice, it doesn’t necessarily mean that they will disappear altogether. Furthermore, ATMs typically provide electronic notice before completing a transaction for a fee, so users will still have access to that knowledge before making a final decision. Transparency is an important part of improving the consumer banking experience, and hopefully credit unions will continue to post fee notices at ATMs, regardless of the legal status.