CUNA Regulatory Comment Call
July 17, 2000
Regulation E Proposal Will Require Disclosure of ATM Fees
- The Federal Reserve Board (Fed) is requesting comments on a proposed rule requiring disclosure of automated teller machine (ATM) fees that are imposed on consumers who hold accounts at other financial institutions. This rule is required under the Gramm-Leach-Bliley Act.
- These ATM fees must be included in a notice that is located in a "prominent and conspicuous" location on or at the ATM. The notice must also appear on the ATM screen or on a paper receipt, either of which must be provided before the consumer is committed to completing the transaction.
- The institution holding the consumer's account must also provide information in an initial notice that informs the consumer that a fee may be imposed by: 1) an ATM operator not holding the consumer's account; and 2) any national, regional, or local network used to complete the transaction. The proposed rule includes a model clause that may be used to satisfy this disclosure requirement.
- The Fed anticipates issuing a final rule in early fall. The final rule will be effective 30 days after it is issued.
Comments on the proposal are due by August 18, 2000. Please submit your comments to CUNA by August 14, 2000. Please feel free to fax your responses to CUNA at 202-371-8240; e-mail them to Associate General Counsel Mary Dunn at firstname.lastname@example.org or to Assistant General Counsel Jeffrey Bloch at email@example.com; or mail them to Mary or Jeff in c/o CUNA's Regulatory Advocacy Department, 805 15th Street, NW, Suite 300, Washington, DC 20005. If commenting directly to the Fed, you must refer to Docket No. R-1077. You may also contact us if you would like a copy of the proposed rule or you may access it on the Internet at the following address: http://www.federalreserve.gov/boarddocs/press/boardacts/2000/20000707/attachment.pdf
The Gramm-Leach-Bliley Act includes amendments to the Electronic Fund Transfer (EFT) Act. These amendments require the disclosure of ATM fees that are imposed by ATM operators on consumers who hold accounts at other financial institutions. The amendments also require the financial institution holding the consumer's account to include information about these fees in the initial disclosures that are already required when consumers contract for EFT services.
Regulation E implements the EFT Act and covers transactions initiated through an ATM, point of sale terminal, telephone bill-payment program, automated clearing house, or home banking program. The proposed rule revises Regulation E to incorporate the amendments in the EFT Act that were enacted as part of the Gramm-Leach-Bliley Act.
DESCRIPTION OF THE PROPOSED RULE
Before imposing a fee on a consumer who holds an account at another financial institutions, an ATM operator will be required to provide notice that informs the consumer that a fee will be charged and the amount of the fee. These fees must be included in a notice that is located in a "prominent and conspicuous" location on or at the ATM. This notice must also appear on the ATM screen or on a paper receipt, either of which must be provided before the consumer is committed to completing the transaction.
This requirement regarding fee disclosures will include balance inquiries, even though balance inquiries are not subject to the other requirements of Regulation E. Also, ATM operators will not required to comply with these disclosure requirements until December 31, 2004 if the ATM machine lacks the technical capability to provide the fee information.
Regulation E currently requires that disclosures be provided by the financial institution that holds the consumer's account at the time the consumer contracts for an EFT service or before the first transfer is made to or from the account. The proposed rule will require that these initial disclosures include a notice that a fee may be imposed by: 1) an ATM operator not holding the consumer's account; and 2) any national, regional, or local network used to complete the transaction. This requirement will also include national networks that operate internationally. If a financial institution's disclosure does not currently include such a provision, it may comply with this requirement by including an insert that describes these ATM surcharges.
The proposed rule includes the following model clause for this new requirement regarding the initial disclosures:
"When you use an ATM not owned by us, you may be charged a fee by the ATM operator or any network used to complete the transfer (and you may be charged a fee for a balance inquiry."
QUESTIONS TO CONSIDER REGARDING THE FED'S PROPOSED RULE ON ATM FEES
- The initial notice will require disclosure of fees imposed by a national, regional, or local
network. Do these national, regional, and local networks impose fees separately? If so, should
these fees be distinguished on the notice? Would it be sufficient to just refer to "any network"
as opposed to "a national, regional, or local network?" (This question was specifically raised in
the proposed rule.)
- To what extent do you already disclose ATM fees and to what extent do these disclosures comply
with the proposed rule? Will you need to make significant changes to your disclosure notices?
Will any such changes be overly burdensome?
- Other comments?
Eric Richard General Counsel (202) 508-6742 firstname.lastname@example.org |
Mary Mitchell Dunn SVP & Associate General Counsel (202) 508-6736 email@example.com
Jeffrey Bloch Assistant General Counsel (202) 508-6732 firstname.lastname@example.org
Catherine Orr Senior Regulatory Counsel (202) 508-6743 email@example.com