Proposal to Amend Regulation E on ATMs

The Commentary isn't the only part of Regulation E that is up for change. The FRB has proposed changes to Regulation E's ATM terminal notices as required by the Gramm-Leach-Bliley Act ("FinMod").

FinMod contains a provision that requires ATM operators to notify customers of any fees imposed for use of the ATM. The notice must be given at a point when the customer still has an opportunity to cancel the transaction without incurring the fee. A particular concern is the practice of imposing fees for a non-customer's use of the ATM to check a balance.

The proposal would create a new section ?205.16, "Disclosures at Automatic Teller Machines" and make corresponding changes to the sections on coverage, ?205.3 and initial disclosures, ?205.7.

In the new ?205.16 would be a definition of an automated teller machine operator: any person that operates an ATM "that does not hold the account from which the transfer is made."

New ?205.16 would require disclosure of fees imposed before the consumer has reached a point of no return. The disclosure would explain the amount of the fee as well as a statement that the fee would be imposed. The proposal provides several methods for giving the terminal notice. It could be shown on the screen or printed out on paper. Either method of disclosure must occur before the consumer incurs the fee. Without the notice, the ATM operator may not impose the fee.

The notice may be on the screen or on a paper notice printed at the terminal. ATM operators that face technical difficulties in complying with either of these requirements could post a printed notice with the fee information on the ATM equipment to be in compliance until December 31, 2004.

The proposed changes to ?205.3 and ?205.7 would add language that would include a balance inquiry to the definition of electronic transfer and include an explanation of fees for a balance inquiry on the initial disclosures. The initial account disclosures would be revised to include a notice - warning - that the consumer may encounter additional fees for use of a non-proprietary ATM.

Copyright © 2000 Compliance Action. Originally appeared in Compliance Action, Vol. 5, No. 8, 7/00