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From Banking and Finance Law Daily, November 7, 2014

ATM user who knew about fee can still sue

By Andrew A. Turner, J.D.

A consumer who was charged a $2.00 fee for electronic fund transfers had standing to bring her claim that a bank failed to post an external notice of fees on its automatic teller machines even though she received an actual screen notice of the fee, according to the U.S. Court of Appeals for the Fifth Circuit. The court also determined that the repeal of the posted notice requirement, leaving only the screen notice requirement did not apply retroactively to extinguish her claim (Mabary v. Home Town Bank, N.A., Nov. 5, 2014, Higginbotham, Circuit Judge).

Standing. The bank contended that the consumer lacked standing to bring her claim because she indisputably received actual notice of the ATM fee and thus suffered no injury-in-fact. Rejecting this contention, the court said that the Electronic Funds Transfer Act’s damages provisions is a valid enforcement mechanism for violations that cause little measurable injury.

In court’s view, a user of an ATM is not in the same position to decline an ATM transaction at the initial point, where she walks by the ATM and sees the posted notice, “as she is at a later point, when she receives on-screen notice only after having retrieved her ATM card, entered personal information such as a Personal Identification Number, and initiated a transaction.” By being deprived of the right to the fee information needed “to decline a transaction before investing the time needed to initiate it,” the consumer suffered sufficient injury to bring a claim.

Retroactivity. The bank argued that the repeal of the “two notice” provision merely changed Congress’ preferred method for effectuating a substantive right to notice, seeking to take advantage of a distinction allowing retroactive application of procedural rules. In the court’s opinion, however, the notice provisions governed the primary conduct of posting notices on ATMs, not procedural mechanisms. Because the consumer had a substantive right to two notices or statutory damages at the time that the claim arose, the amendment did not apply retroactively.

Mootness. The consumer sought class certification to represent persons who were charged a terminal fee at ATMs where no notice indicating that a fee was to be charged was posted on or at the outside of the ATM machine. In response, the bank made an offer of judgment to the consumer in the amount of $1,000, which was refused. Because no class had been certified, the bank alleged that the case was mooted by an offer of complete relief. On the contrary, the court said that the bank’s attempt to “pick off” the consumer’s claim before the court could decide the issue of class certification was saved from mootness by the “relation back” doctrine, which allows certification to “relate back” to the filing of the complaint, when the claims presented a live controversy.

Dissent. In a dissenting opinion, Circuit Judge Jolly said that “lacking any injury in fact,” there was no standing to sue. The dissent contended that the majority’s theory of injury was also derailed by the absence of any showing that the consumer might have made different decisions had she received posted notice.

The case is No. 13-20211.

Attorneys: Emil Lippe, Jr. (Lippe & Associates) for Lisa Mabary. William Frank Carroll (Cox Smith Matthews, Inc.) for Home Town Bank, NA.

Companies: Home Town Bank, NA

MainStory: TopStory CreditDebitGiftCards LouisianaNews MississippiNews TexasNews

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