Michigan Coupole Files Suits Against CUs on ATM Fee Disclosures

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.

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Guard against data-breach phishing scams

Double-check that spam filter: The Better Business Bureau (BBB) is alerting consumers to the first phishing e-mail it says stemmed from a massive data breach earlier this month (WalletPop April 8).

E-mail marketing firm Epsilon reported the breach on April 1 after hackers stole e-mail addresses and names from the company's databases, exposing millions of consumers to potential phishing scams.

Phishing occurs when scammers send e-mails that appear to be from legitimate companies in an attempt to acquire your personal information, such as account numbers. The scams can become even more deceptive--and convincing--when crooks obtain and use your name to target messages directly to you. This is known as "spearphishing."

According to the BBB, many more phishing attacks are likely to follow as a result of the data breach. Take these steps to protect your personal information:

•Avoid links. If you receive a suspicious e-mail, don't click on any links contained in the message. You could be directed to a fraudulent website or to dangerous malware.

•Don't share information. Legitimate companies will never ask for your personal information via e-mail. Don't respond to requests for financial account numbers, Social Security numbers, or other information.

•Talk it over. Make sure all family members with an e-mail address know how to spot a phishing e-mail. Kids and older adults often are more susceptible to these types of scams.

•Get secure. Before submitting credit card numbers or other sensitive information online, make sure the website is secure. A secure website starts with https at the beginning of the URL.

•Watch for errors. E-mails that contain frequent spelling mistakes or poor grammar usually signal a scam.

•Don't wire money. Never wire money in response to an e-mail request or to anyone you don't know. You'll be sending funds to a crook--and you'll be out the money when the scam is discovered.

•Shield your computer. Update and run antivirus programs regularly.

Reduced debit swipe fees may hasten shift to phone payments

The "mobile wallet" is coming, a smartphone application that consumers can use to tap their deposit accounts at checkout, bypassing the current card system. (AP photo)

The era when you could get a little gift back every time you swiped your debit card may be coming to an end - and the brave new world of mobile payments may be ready to replace it.

Last year, Congress ordered the financial industry to get ready for a substantial reduction in interchange fees - the price a merchant pays each time a customer swipes a debit card and the source of revenue that paid for those debit card rewards. In December the Federal Reserve recommended that Congress slash swipe fees by more than 70 percent, to 12 cents per transaction.

Banks were livid at the recommendation, which promised to erase millions of dollars from their bottom line, and they pledged to fight it. Wayzata-based TCF Financial takes that fight to court next week, trying to overturn the new law on constitutional grounds.

But some of the nation’s largest institutions - including Wells Fargo Bank - indicated they are ready to move on, announcing in the last two weeks that they would stop or curtail the rewards programs that they have used to boost debit card usage.

Those banks’ willingness to drop rewards is an acknowledgement that the programs did their job, said Jerry Rossow, a bank marketing consultant in St. Paul.

“People have already adopted debit cards,” Rossow said. “They’re comfortable with them.”

Young consumers have grown up in an electronic, card-based world, he said, and for many older consumers, the rewards program worked. “You tell people that they’ll use the card five times in a month and get a price reduction on something else and they’ll start doing it. It’s an easy habit to form.”

Payment data tell the same story. Debit card usage grew rapidly during the last decade: Transactions reached 37.9 billion in 2009 - half of them from a checking account. Paper checks made up just 30 percent.

Rossow, who advises community banks, said small banks probably will continue debit rewards for a while. Under the federal rule changes, banks with under $10 billion in assets will be allowed to charge a higher swipe fee on debit card payments. Meanwhile, industry representatives for community banks and credit unions have said that they think the marketplace will end up forcing their members to match the lower fees the large banks charge.

For the rest of the story, visit: http://finance-commerce.com/2011/04/reduced-debit-swipe-fees-may-hasten-shift-to-phone-payments/

E-Mail Stastics Galore

Email is the preferred method of commercial communication by 74% of all online adults. - Merkle "View From the Digital Inbox 2011" (2011)

63 % of mobile email users check the account a minimum of once per day. - Merkle "View From the Digital Inbox 2011" (2011)

In 2010, 43% of online population believe that email is 'fun', compared to 55% in 2008. - Merkle "View From the Digital Inbox 2011" (2011)

In 2010 30% of total email time was devoted to commerical emails, compared to 17% in 2005. - Merkle "View From the Digital Inbox 2011" (2011)

Only one percent of 500 surveyed retailers are sending a welcome series to engage new email subscribers. - Listrak "Creating an eCommerce Welcome Series to Increase Subscriber Engagement and Email ROI" (2010)

94% of daily email users subscribed to marketing messages - ExactTarget "Subscribers, Fans, and Followers: The Social Profile" (2010)

67% of US internet users say the motivation behind giving their email address to a company is to receive discounts and promotions. -ExactTarget "Email X-Factor Study" (2010)

55% of US internet users say the motivation behind giving their email address to a company is to get a "freebie" in exchange for my email address. -ExactTarget "Email X-Factor Study" (2010)

Only 14% of US internet users say the motivation behind giving their email address to a company is to interact with the brand. -ExactTarget "Email X-Factor Study" (2010)

57% of internet users worldwide said they are more apt to buy a product in a store after getting a marketing email. - e-Dialog, "Global Perspectives: a Study of Consumer Attitudes to Digital Marketing" (2010)

In the United States, only 4% of internet users said marketing emails made them decide not to buy a product. - e-Dialog, "Global Perspectives: a Study of Consumer Attitudes to Digital Marketing" (2010)

In China, 75% of internet users said they had made a purchase in-store or over the phone because of a marketing email. - e-Dialog, "Global Perspectives: a Study of Consumer Attitudes to Digital Marketing" (2010)

58 percent of consumers start their online day by reading their emails. Meanwhile, 20 percent begin on search engines and 11 percent check their Facebook pages. -ExactTarget "Email X-Factor Study" (2010)

Women are more likely than men to sign up for emails in order to obtain deals and promotions (67% compared to 57%). -ExactTarget "Email X-Factor Study" (2010)

88% of women indicate that promotions have motivated them to subscribe to email marketing messages, compared to 70% of men - with 65% of women having subscribed to email marketing messages in return for a "free" product, compared to 44% of men. -ExactTarget "Email X-Factor Study" (2010)

79 percent of US consumers surveyed stated that the marketing messages that they opt into are sent to their primary personal account. e-Dialog "Manifesto for E-mail Marketers: Consumer Demand Relevance" (2010)

Overall just 12 percent of US consumers report to have a dedicated e-mail account for marketing messages as compared to 20 percent of UK consumers. e-Dialog "Manifesto for E-mail Marketers: Consumer Demand Relevance" (2010)

59% of US and UK Internet Users said the reason for not regularly opening/reading email marketing messages is that they come too frequently. e-Dialog "Manifesto for E-mail Marketers: Consumer Demand Relevance" (2010)

55 percent of consumers stated they do not open and read messages regularly because they don't match their areas of interest e-Dialog "Manifesto for E-mail Marketers: Consumer Demand Relevance" (2010)

13.4% of mobile subscribers, use the Web via a mobile device at least monthly in 2010. - eMarketer (2010)

75% of daily social media users said email is the best way for companies to communicate with them, compared to 65% of all email users. - MarketingSherpa (2010)

49% of Twitter users said they made an online purchase because of an email, compared to 33% of all email users. - MarketingSherpa (2010)

If email was a country, its 1.4 billion users would make it the largest in the world. Bigger than China, bigger than the populations of the USA and European Union combined. - Email Marketing Reports (2009)

181: the number of marketing emails it would take to produce enough revenue to buy one share in Microsoft. - Email Marketing Reports (2009)

59% of email users spend more than 20 minutes a week with permission email and 27% spend an hour or more weekly. - Merkle Interactive Services (2009)

Permission-based email accounts for 26% of time spent with email. - Merkle Interactive Services (2009)

74% of Internet users age 64 and older send and receive email, making it the most popular online activity for this age group. - Pew Internet and American Life Project (Feb 2009)

More than 90% of Internet users between 18 and 72 said they send and receive email, making it the top online activity just ahead of search engines, according to the non-profit research group. - Pew Internet and American Life Project (Feb 2009) The number of marketing emails sent by U.S. retailers and wholesalers this year will hit 158 billion and grow 63% to 258 billion in 2013. - Forrester's US Email Marketing Volume Forecast (2008)

Nearly one-quarter of Internet users surveyed said they were most likely to check their email upon waking. - AOL/Beta Research Corporation (June 2008)

More than one-third said they checked throughout the day. - AOL/Beta Research Corporation (June 2008)

More than seven out of 10 employed respondents also said they checked their personal email at work - and nearly one-third said they did so more than three times a day. - AOL/Beta Research Corporation (June 2008)

$5 ATM Fees Coming

J.P. Morgan Chase and other banks are trying to recoup approximately $30 billion a year in lost overdraft fee income by testing $5 ATM fees, Consumer Action spokesman Joe Ridout told CNBC.

These banks have "historically been reliant on overdraft fees," he said, so they're "coming up with new ways to make up the difference." He said higher ATM fees and other rising costs penalize small depositors.

Nessa Feddis, spokeswoman with the American College of Consumer Financial Services, agreed there are "enormous pressures on banks because of lost revenue."

But she insisted that "most people don't pay ATM fees. Only non-customers who otherwise pay nothing to contribute to the cost of providing the ATMs pay the fee. That is fair because otherwise they are not contributing to the cost of providing the service."

She blamed "price controls that the government is imposing" for drastically limiting debit card interchange fees.

"Those debit card interchange fees — and you’re talking about a penny on the dollar — basically not only provide value to the merchant but they also support the cost of providing debit cards and checking accounts. Until now, we’ve been lucky with (banks offering) a lot of free accounts. I think we will see that go away."

Ridout said the banks are exchanging in political brinksmanship by using the threat of higher ATM fees to "encourage" pressure on the Federal Reserve to "tamp down what this interchange cap is going to be." The Fed issued draft interchange fee rules in December.

Ridout said no one is forcing the banks to charge higher ATM fees, and consumers have other choices if they don't want to pay them.

Credit unions don't charge fees, he said, because they "don’t aim to turn a profit, they have not relied on overdraft fees that gouge consumers and they don’t pay their executives eight-figure salaries or multi-million-dollar bonuses and they don’t have to come up with rinky-dink fees to support these irresponsible levels of compensation."