In an action that could have broad ramifications among credit unions and banks, a local attorney filed a purported class action suit here last week claiming Pawtucket CU violated the Electronic Funds Transfer Act by failing to properly disclose the fees it charges non-members on its ATMs.
The suit was filed in state court on behalf of a local resident, Minoska Pena, but is expected to be joined by others as part of a class action, according to Christopher Lefebvre, the attorney representing Pena. Lefebvre said that the state's second largest credit union failed to make proper disclosures on fees charged to non-credit union users on its 12 ATMs, despite a requirement under the EFT Act, also known as the Federal Reserve's Reg E, that fees must be disclosed conspicuously and prominently both on the front of the machines and on screen. "It's going to be up to the courts to determine what that means," said Lefebvre. "It's going to be very interesting to see how the courts interpret this requirement: 'prominent and conspicuous.'"
"Personally, I find the facts rather egregious," said Lefebvre. "They [the credit union] had no notices on any of their ATMs None of their ATMs prior to the filing of the suit had any disclosures. The law requires two forms of disclosures: on the outside of the machines, in addition to the notice on the screen."
Within hours after the filing of the suit credit union workers were seen placing a new disclosure sticker on the credit union's ATM across from city hall. CU officials refused to comment last week, saying they had not seen the suit yet.
"At this point, without having been served, it's premature to really say what is, or what isn't going on," said Timothy Germaine, vice president of the $800-million credit union.
Violation of the EFT Act could bring a fine of up to $500,000, as well as reimbursement of fees charged to consumers.
In an action that could have much wider ramifications, Lefebvre, also filed similar suits last week against three national banks in federal court in Boston: Bank of America, Sovereign Bank and Citizens Bank, charging similar violation of the disclosure requirements of the EFT Act. The claims against the big banks vary in that the posted disclosures on the banks' machines are vague and ambiguous, according to Lefebvre. "Some of them say, 'we may charge you,' or 'we're going to charge you,' but they don't say how much," he claimed.
The alleged improper disclosures on ATMs, he claimed, is prevalent among both credit unions and banks. "If you took a survey, you would be surprised how many banks and credit unions fail miserably at complying with the law," he said. "The sad thing is, it's so simple to do. It costs what? Maybe four cents, five cents, to place a sticker?"
