A Michigan couple--who drive around looking for ATMs without proper fee-notification signs and then file class action lawsuits against financial institutions without the signs--filed four more lawsuits over ATM disclosures last week in Michigan. The latest batch are all against credit unions.
The couple, Nancy Kinder and Ray Harrison of Fowlerville, Mich., claim in the lawsuits that nondisclosure of fees charged for transactions at ATMs violates Regulation E, the Electronics Funds Transfer Act, which has required institutions to post a notice in a prominent place on the ATM about fees. Court records indicate they travel the state by car and photograph ATMs without legal signage.
They have sued 36 credit unions and bank in two years, according to Associated Press Newswires (April 22). Similar suits have been filed by others in other states as well.
Kinder is involved in at least 11 cases the past two years, filed on her behalf by an attorney from Chevy Chase, Md., Geoffrey Bestor. The most recent cases--filed on April 18 in the U.S. District Court for the Eastern District of Michigan (Detroit)--are against:
•Lenco CU, Adrian, Mich., with $51 million assets;
•Michigan Schools and Government CU, Clinton Township, with more than $1.04 billion assets;
•Jackson (Mich.) Community FCU, $29 million assets; and
•Northwood CU, Royal Oak, $20 million assets.
Other suits she has filed against credit unions include: ELGA CU, based in Burton, Mich., with $260 million assets, filed on April 16, 2010, and Sunrise Family CU, based in Bay City, Mich., with $90 million in assets, filed July 8, 2009. The case against Sunrise Family was closed on Oct. 21, 2010. Court records said the case "is dismissed with prejudice and without costs, sanctions or attorneys' fees awarded in favor or against either party."
Kinder also has filed against these banks:
•United Bancorp Inc., filed Feb. 3, 2011;
•Paramount Bank, filed June 29, 2010;
•Bestbank, filed June 29, 2010 and closed Feb. 1, 2011;
•Dearborn Federal Savings Bank, filed June 29; and
•Community State Bankcorp, filed June 29, 2010, and closed Dec. 23, 2010.
The American Bankers Association told the Associated Press that the lawsuits are frivolous.
In January, CUNA Mutual Group warned its policyholders of a "significant" spike in lawsuits against credit unions related to ATM fee disclosures. Twelve suits were filed between mid-December and the January (News Now Jan. 14). At that time, the insurance company said many credit unions sued erroneously believed that a fee notice sign was not necessary since the fee was disclosed on the terminal screen of the ATM. Some suits were prompted when institutions changed their fees but not their signs.
Reg E requires credit unions to post a sign--in a prominent, conspicuous location on and at every ATM they own or operate--stating that a fee will or may apply. It does not require the actual fee to be placed on the sign. It also requires disclosing the fee on the terminal screen or paper notice before the consumer is committed to paying the fee. The fee should also appear on the transaction receipt.
CUNA Mutual warned credit unions to develop and write procedures for inspecting their ATMs regularly to ensure the signs are intact, and to photograph the ATM at the time of inspection, maintain an inspection log for all ATMs and have management review the log. The log should include the location inspected, date, status of the sign (missing or present), action taken (replaced the sign) and initials of the employee performing the inspection. Also keep a supply of signs or stickers to replace missing ones, and periodically test the ATM with a non-credit-union-issued ATM network card or debit card to confirm the fee appears on the screen.