Disclosures for Charging Foreign ATM Fees

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Question:

Our bank is changing it's ATM fee assessment structure: currently, our customers are charged for each time they use a foreign bank's ATM, and these fees are aggregated and deducted from the customer's account at the end of the statement cycle. We are going to start assessing this fee at the time the customer uses the foreign ATM. Do we need to provide customer's 30 notice of this change? Note: our current disclosures do not mention when foreign ATM fees are assessed to customers' accounts, the disclosures only state that customers may be charged a fee by the foreign ATM operator or any network used to conduct the transaction.

Answer:

Answer by John Burnett: There are two types of foreign ATM fee disclosures that you are required to make. One describes your charge for using another bank's ATM (205.7(b)(5)). The other informs customers that other ATM operators or networks used to conduct a transaction (including a balance inquiry) may impose a separate fee (205.7(b)(11)).

The (b)(11) disclosure, which you refer to in the last part of your question, has nothing to do with the (b)(5) disclosure, which appears to be the one you need to be concerned about.

If you already disclose that you will charge the cardholder $X.XX each time the cardholder makes an EFT at another bank's ATM, it doesn't matter whether you assess the fee at the time of the transaction's posting, or charge it at statement time. If your disclosure of the dollar amount is accurate, there is no Regulation E requirement that you give the customer advance notice of the proposed change.

It might, however, be a good idea to inform customers, so that they might be aware of the change when it appears on their statements. They're likely to think you're exacting another fee because it will start showing up in a different place on the statement.

And by the way, if an advance notice were necessary under Regulation E, it would only have to be 21 calendar days (205.8(a)(1)).

Answer:

Answer by Jim Bedsole: I may just be splitting hairs here:

If you initially disclosed to your customers that your charges for using the other bank's ATM would be assessed at the end of the statement period (you are not required to disclose the timing of the fee, but you may have), then I believe changing that timing would require advance notice under Reg E (which is 21 days as John stated above).

First published on BankersOnline.com 08/15/05