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Banks push back against lawsuits that target fee-warning signs on ATMs

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Jarrett Dieterle
Legal Intern, Manhattan Institute's Center for Legal Policy

When ATM users withdraw cash from an ATM that is not owned by their bank, they can often expect to be subjected to a fee that can range from $1-$5 for the transaction. Before administering the fee, an on-screen warning pops up and informs the ATM user of the impending charge if they choose to go through with the transaction. According to a rule that is a part of the Electronic Fund Transfer Act, ATMs must also have an external sign attached to the outside of the ATM that warns of fees. Although such a requirement may sound innocuous, it has led to a rash of costly lawsuits:

[I]n recent years, banks say, the requirement of a physical, external notice has made them vulnerable to so-called "A.T.M. vigilantes," who use A.T.M.'s that are missing the placards and file lawsuits against the institutions. The notices are typically affixed on or near the A.T.M. with adhesive. (A Michigan couple has filed dozens of suits, which were settled for thousands of dollars, according to news reports.) The Credit Union National Association says at least 110 class-action lawsuits have been filed against credit unions over the last two years, at least 20 of which were filed in the first four months of this year.

The banking industry is fighting back by pushing legislation in Washington that would eliminate the requirement for the duplicative external fee-warning signs:

The goal is to stop nuisance lawsuits. Rep. Blaine Luetkemeyer, R-Mo., said that in his home state one man visited five ATMs, threatened to sue over missing fee-disclosure signs, and settled the case for more than $100,000. 'And apparently it's been going on throughout the county,' said Luetkemeyer, who is sponsoring the House legislation. 'Everybody realizes this is a situation that's got to be fixed.'"

The bill, known as H.R. 4367, unanimously passed the House (by a vote of 371-0), and is now heading to the Senate.

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Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


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The Manhattan Insitute's Center for Legal Policy.