[House Report 112-576]
[From the U.S. Government Publishing Office]
112th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 112-576
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AMENDING THE ELECTRONIC FUND TRANSFER ACT TO LIMIT THE FEE DISCLOSURE
REQUIREMENT FOR AN AUTOMATIC TELLER MACHINE TO THE SCREEN OF THAT
MACHINE
_______
June 29, 2012.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Bachus, from the Committee on Financial Services, submitted the
following
R E P O R T
[To accompany H.R. 4367]
[Including cost estimate of the Congressional Budget Office]
The Committee on Financial Services, to whom was referred
the bill (H.R. 4367) to amend the Electronic Fund Transfer Act
to limit the fee disclosure requirement for an automatic teller
machine to the screen of that machine, having considered the
same, report favorably thereon without amendment and recommend
that the bill do pass.
Purpose and Summary
H.R. 4367 amends Section 904 of the Consumer Credit
Protection Act--commonly known as the ``Electronic Fund
Transfer Act'' (EFTA)--by eliminating the requirement that fee
notices be affixed to or displayed on automated teller machines
(ATMs). The requirement is unnecessary because ATM operators
are required to disclose fees on ATM screens and consumers have
the right to decline the transaction without being charged.
H.R. 4367 will protect ATM operators from frivolous lawsuits
related to this fee notice requirement.
Background and Need for Legislation
The EFTA and its implementing rule, Regulation E, require
ATM operators to display notices in two separate places
notifying consumers that they might be charged fees for
withdrawing cash from the ATM. The EFTA and Regulation E
require that one of these notices must be posted in a prominent
and conspicuous location on or at the ATM. The second notice
must appear on the screen of the ATM, or on a paper notice
issued from the machine, after the transaction is initiated and
before the consumer is irrevocably committed to completing the
transaction.
When the provision requiring physical ATM fee disclosures
was enacted in 1999, consumers were less familiar with ATM
technology. Some consumers may not have known that they might
have to pay for using certain ATMs. Because ATM screens were
smaller and had lower resolutions in 1999, Congress required
ATM operators to display fee notices to consumers both on the
ATM screen and in a prominent location on the machine itself.
Today, ATMs are more prominent and better understood, screens
are much larger, and they display sharper images. Also, unlike
before, when many ATMs were not capable of providing the notice
on the monitor, every ATM can notify consumers of possible fees
today.
But even though the EFTA's physical disclosure requirement
has become obsolete, the requirement exposes banks, credit
unions and retailers to frivolous lawsuits and unnecessary
costs. Under the EFTA, a consumer who uses an ATM that does not
have a fee notice physically attached may recover statutory
damages of between $100 and $1,000 for each transaction. The
law also permits class action lawsuits to recover up to half a
million dollars.\1\ There is evidence that some plaintiffs are
purposefully removing these superfluous notices from ATMs and
then filing suits against ATM operators for failing to provide
adequate notice on the machine.
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\1\15 U.S.C. Sec. 1693m(a).
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Without this legislation, ATM operators may be forced to
raise fees or reduce the number of ATMs. This legislation can
help ensure consumers will receive appropriate notifications
about ATM fees and still have convenient access to their funds.
Hearings
Throughout the 112th Congress, many witnesses have
testified before the Subcommittee on Financial Institutions and
Consumer Credit about problems associated with the physical ATM
notice requirements contained in the EFTA.
On May 9, 2012, the Subcommittee held a hearing entitled
``Rising Regulatory Compliance Costs and Their Impact on the
Health of Small Financial Institutions.'' The following
witnesses testified at the hearing:
Mr. William Grant, Chairman, President and Chief
Executive Officer, First United Bank & Trust
Mr. Ed Templeton, President and Chief Executive
Officer, SRP Federal Credit Union
Mr. Samuel Vallandingham, Vice President and Chief
Information Officer, First State Bank
Mr. Terry West, President and Chief Executive
Officer, VyStar Credit Union
Mr. Adam Levitin, Professor of Law, Georgetown
University Law Center
Mr. Mike Calhoun, President, Center of Responsible
Lending
On March 14, 2012, the Subcommittee held a field hearing in
San Antonio, Texas, entitled ``An Examination of the Challenges
Facing Community Financial Institutions in Texas.'' The
following witnesses testified at the hearing:
Mr. Robert Glenn, President and Chief Executive
Officer, Air Force Federal Credit Union
Mr. George Hansard, President, Pecos County State
Bank
Ms. Maria Martinez, President and Chief Executive
Officer, Border Federal Credit Union
Mr. Cliff McCauley, Executive Vice President,
Correspondent Banking, Frost Bank
Mr. Les Parker, Chairman, President and Chief
Executive Officer, United Bank of El Paso de Norte
Mr. Ignacio Urrabazo, Jr., President, Commerce
Bank
Ms. Janie Barrera, President and Chief Executive
Officer, Accion Texas Inc.
On November 16, 2011, the Subcommittee held a legislative
hearing entitled ``H.R. 1697: The Communities First Act.'' The
following witnesses testified at the hearing:
Mr. Salvatore Marranca, President and Chief
Executive Officer, Cattaraugus County Bank on behalf of the
Independent Community Bankers Association
Mr. O. William Cheney, President and Chief
Executive Officer, Credit Union National Association
Mr. John A. Klebba, President and Chief Executive
Officer, Legends Bank, on behalf of the Missouri Bankers
Association
Mr. Fred Becker, Jr., President and Chief
Executive Officer, National Association of Federal Credit
Unions
Mr. Arthur E. Wilmarth, Jr., Professor of Law,
George Washington University, Executive Director, Center for
Law, Economics and Finance
Mr. Damon Silvers, Director, Policy and Special
Counsel, American Federation of Labor and Congress of
Industrial Organizations
Mr. Adam J. Levitin, Professor of Law, Georgetown
University Law Center
Committee Consideration
The Committee on Financial Services met in open session on
June 27, 2012, and ordered H.R. 4367 favorably reported to the
House by voice vote.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto.
There were no record votes taken on amendments or in connection
with ordering H.R. 4367 reported to the House. A motion by
Chairman Bachus to report the bill to the House with a
favorable recommendation was agreed to by voice vote.
Committee Oversight Findings
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee has held hearings and
made findings that are reflected in this report.
Performance Goals and Objectives
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the Committee establishes the
following performance related goals and objectives for this
legislation:
The first objective of H.R. 4367 is to eliminate the
requirement that fee notices be affixed to or displayed on
ATMs. The requirement is unnecessary because ATM operators are
required to disclose fees on an ATM screen and consumers have
the right to decline the transaction without being charged. The
second objective of H.R. 4367 is to protect ATM operators from
frivolous lawsuits related to this notice requirement.
New Budget Authority, Entitlement Authority, and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee adopts as its
own the estimate of new budget authority, entitlement
authority, or tax expenditures or revenues contained in the
cost estimate prepared by the Director of the Congressional
Budget Office pursuant to section 402 of the Congressional
Budget Act of 1974.
Committee Cost Estimate
The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.
Congressional Budget Office Estimate
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, June 29, 2012.
Hon. Spencer Bachus,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 4367, a bill to
amend the Electronic Fund Transfer Act to limit the fee
disclosure requirement for an automatic teller machine to the
screen of that machine.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Susan Willie.
Sincerely,
Douglas W. Elmendorf.
Enclosure.
H.R. 4367--A bill to amend the Electronic Fund Transfer Act to limit
the fee disclosure requirement for an automatic teller machine
to the screen of that machine
Enacting H.R. 4367 would affect direct spending and
revenues; therefore, pay-as-you-go procedures apply. The bill
would require the Consumer Financial Protection Bureau (CFPB)
and the Federal Reserve Board to revise certain disclosure
regulations. Changes in the CFPB's workload are reflected as
increases or decreases in its mandatory appropriations, while
changes in the workload of the Federal Reserve Board are
reflected in the budget as changes in revenues. Based on
information from those agencies, CBO estimates that revising
those regulations would not have a significant effect on their
workload and any change in direct spending (for the CFPB) or
revenues (for the Federal Reserve Board) would be
insignificant. Implementing H.R. 4367 would not affect spending
subject to appropriation.
Under current law, operators of automatic teller machines
(ATMs) are required to disclose fees charged to use the machine
by posting a notice both on the equipment itself and on the
computer screen of the ATM. H.R. 4367 would eliminate the
requirement that the fee notice be displayed on the machine,
allowing the disclosure requirement to be met if the notice
appears only on the ATM screen.
H.R. 4367 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would not affect the budgets of state, local, or tribal
governments.
The CBO staff contacts for this estimate are Susan Willie
(for the CFPB) and Barbara Edwards (for the Federal Reserve
Board). The estimate was approved by Theresa Gullo, Deputy
Assistant Director for Budget Analysis.
Federal Mandates Statement
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of the section
102(b)(3) of the Congressional Accountability Act.
Earmark Identification
H.R. 4367 does not contain any congressional earmarks,
limited tax benefits, or limited tariff benefits as defined in
clause 9 of rule XXI.
Section-by-Section Analysis of the Legislation
Section 1. Fee disclosure requirement
This section amends Section 904(d)(3)(B) of the Consumer
Credit Protection Act (15 U.S.C. 1693b(d)(3)(B)) to eliminate
the requirement that ATM operators post in a prominent and
conspicuous location on or at the ATM a notice that a fee is
imposed by the operator when consumers withdraw cash from the
ATM.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
CONSUMER CREDIT PROTECTION ACT
* * * * * * *
TITLE IX--ELECTRONIC FUND TRANSFERS
* * * * * * *
Sec. 904. Regulations
(a) * * *
* * * * * * *
(d) Applicability to Service Providers Other Than Certain
Financial Institutions.--
(1) * * *
* * * * * * *
(3) Fee disclosures at automated teller machines.--
(A) * * *
(B) Notice [requirements.--
[(i) On the machine.--The notice
required under clause (i) of
subparagraph (A) with respect to any
fee described in such subparagraph
shall be posted in a prominent and
conspicuous location on or at the
automated teller machine at which the
electronic fund transfer is initiated
by the consumer.
[(ii) On the screen.--The notice
required under clauses (i) and (ii)]
requirement.--The notice required under
clauses (i) and (ii) of subparagraph
(A) with respect to any fee described
in such subparagraph shall appear on
the screen of the automated teller
machine, or on a paper notice issued
from such machine, after the
transaction is initiated and before the
consumer is irrevocably committed to
completing the transaction[, except
that during the period beginning on the
date of the enactment of the Gramm-
Leach-Bliley Act and ending on December
31, 2004, this clause shall not apply
to any automated teller machine that
lacks the technical capability to
disclose the notice on the screen or to
issue a paper notice after the
transaction is initiated and before the
consumer is irrevocably committed to
completing the transaction.].
* * * * * * *