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From Banking and Finance Law Daily, August 5, 2013

Consumer could sue for ATM notice violation based on “informational injury”

By Richard A. Roth, J.D.

A consumer who claimed he had not received the required notice of fees during automated teller machine transactions could sue the machines’ owners for statutory damages based solely on an “informational injury,” the U.S. Court of Appeals for the Eighth Circuit has decided. The consumer satisfied the constitutional requirements for standing even if he had not suffered any pecuniary injury, the court determined (Charvat v. Mutual First Federal Credit Union, Aug. 2, 2013, Shepherd, Circuit Judge).

The consumer claimed that when he used the financial institutions’ ATMs for three separate transactions, there was no notice of transaction fees posted on or at the machines. This notice was required by the Electronic Fund Transfer Act at the time, but is no longer required due to a 2012 amendment. The consumer conceded that he did receive the on-screen notice before he agreed to complete the transactions and pay the fees. As a result of the missing notices, the consumer sued the two institutions for violating the EFTA.

Trial court dismissal. Under Article III of the U.S. Constitution, a person invoking the jurisdiction of the federal courts must establish that he has standing to sue. This includes showing that he has an “injury in fact”—a concrete and particularized, actual or imminent injury to a legally protected interest.

The trial court dismissed the consumer’s suit after deciding that he had not shown the required injury. Without discussing the $2 fee the consumer said he paid, the court said that the institutions’ failure to post the required notice would have constituted an “injury in law” but not an “injury in fact.” As a result, the consumer had no standing to sue the institutions for the claimed violations.

The consumer appealed the trial court’s dismissal of his suit.

Informational injury and standing. The appellate court passed over considering whether the consumer’s payment of the $2 fee would have constituted an injury in fact. Since the trial court had not considered the payment, there was no decision to review, the appellate court said. However, the informational injury caused by the alleged absence of the notice on or at the machine would be an injury in fact, the court said.

It was possible for a violation of a right given by a statute to be an injury in fact even without any monetary loss, the court said. As examples, the court pointed to the failure to disclose information under federal election laws and the failure to make disclosures required by the Truth in Lending Act, both of which could give rise to claims for statutory damages.

The consumer’s claim for statutory damages was sufficiently related to the informational injury to give the consumer standing to sue, the court also said. At the time of the transactions described by the consumer, the EFTA required ATM operators to post fee notices on or at their machines if they intended to charge fees. If a fee was charged in the absence of the notice, there was an injury, and statutory damages for the violation would be directly related to that injury, the court said.

The situation would be different if the consumer had not personally used the ATMs, the court noted. He would not be permitted to sue for a violation based solely on the public interest in seeing that the institutions complied with the EFTA. In this case, however, he was asserting that he personally had not received the required notice.

Causation. The financial institutions also argued that the consumer’s injury was not “fairly traceable” to their failure to provide the transaction fee notice. They claimed that when the consumer agreed to pay the $2 fee after he saw the on-screen fee notice, any causal link between the violation and the injury would have been broken.

The appellate court disagreed. Not every weakness in the change of causation would deprive the consumer of standing to sue, the court said. If the institutions had provided the required notice, the consumer would not have had to choose between completing the transaction in the absence of that notice or walking away, the court said. That was enough to link the claimed violation to the injury.

The case is No. 12-2790.

Attorneys: Deepak Gupta (Gupta & Beck) for Jarek Charvat. Monica L. Freeman (Woods & Aitken) for Mutual First Federal Credit Union.

Companies: First National Bank of Wahoo; Mutual First Federal Credit Union

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