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Minn. fed court denies ATM disclosure class action
ST. PAUL, MINN. (1/9/12)--A federal judge in Minnesota has denied a motion to certify as a class action lawsuit a man's claim against a Roseville, Minn.-based bank for failure to provide a fee disclosure on the outside of its ATM.

Like others in multiple lawsuits brought against financial institutions in several states, Adam Johnson claimed that the bank--in this case, U.S. Bank, N.A.--had violated the Electronic Funds Transfer Act (EFTA) by failing to post a notice of its $3 fee it charges to non-bank customers on the outside of the ATM.  He sought a class certification and the court heard oral arguments on Nov. 10.

Johnson used the ATM on Sept. 23, 2010, and was charged a $3 fee as a non-U.S. Bank customer for withdrawing $40 from the ATM, according to the Dec. 15 ruling by U.S. District Chief  Judge Michael Davis.  Before Johnson withdrew the funds, he saw an on-screen notice that informed him of the fee but chose to proceed with the transaction, the document said.

The ruling noted that Johnson did not meet two of the four requirements of a class action under Rule 23 of the Federal Rules of Civil Procedure, namely:   typicality, "that class representatives' claims or defenses are typical of the claims or defenses of the class," and adequacy--"the representative parties will fairly and adequately protect the interests of the class."

"The court concludes that the plain language of EFTA's actual damage provision requires that the plaintiff prove detrimental reliance. Johnson admits that he read the on-screen notice and , fully aware that he would be charged a fee if he proceeded, decided to withdraw money from defendant's ATM," said the judge's ruling. "He cannot show detrimental reliance. Therefore, his claims and defenses are not typical of the class he seeks to certify, which includes members who seek actual damages," the ruling added.

Although the finding is positive for the financial institution, it is limited to the motion to certify a class. 

The Credit Union National Association early last week alerted credit unions and the Consumer Financial Protection Bureau of an increasing number of lawsuits brought against credit unions and other financial institutions when ATM notices have been removed, damaged or destroyed (News Now Jan. 3).  CUNA's Center for Professional Development recently re-released a spring audio conference on the topic of ATM fee disclosures to assist credit unions with issues.

CUNA said some credit unions and others have discovered outside notices on ATMs have been removed or destroyed without the financial institution's knowledge and photographs taken to show "noncompliance."  Similar lawsuits charging EFTA noncompliance have been filed in Michigan, Texas, Louisiana, New Mexico, and other states. Last year, a rash of 12 suits were filed between mid-December of 2010 and January 2011 (News Now April 25, May 24, and Dec. 20).


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