H. Rept. 112-576 - 112th Congress (2011-2012)

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House Report 112-576 - AMENDING THE ELECTRONIC FUND TRANSFER ACT TO LIMIT THE FEE DISCLOSURE REQUIREMENT FOR AN AUTOMATIC TELLER MACHINE TO THE SCREEN OF THAT MACHINE

[House Report 112-576]
[From the U.S. Government Publishing Office]


112th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     112-576

======================================================================

 
 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.
---------------------------------------------------------------------------
    \1\15 U.S.C. Sec. 1693m(a).
---------------------------------------------------------------------------
    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.].

           *       *       *       *       *       *       *