First Commonwealth Financial Corp., of Indiana, Pa., thought it had done a pretty good job.
Like many banks, the company scrambled to upgrade its ATMs ahead of a March 15 deadline to make them accessible to the blind. Of the $6 billion asset bank's 120 ATMs, 118 now meet the standard set by the Americans with Disabilities Act.
Unfortunately for First Commonwealth, those last two machines were enough to ensnare the bank in proposed class action lawsuits that have snagged 16 other banks in Ohio and Western Pennsylvania since late March.
"We feel we are very much working in the spirit of what needs to be done," Susie Barbour, a spokeswoman for First Commonwealth, says.
Banks have already spent hundreds of millions of dollars getting their ATMs into compliance with titles II and III of the Americans with Disabilities Act, which require them to make all of their ATMs fully accessible to the visually impaired. But many aren't done, leaving them open to potentially millions more in litigation costs. Bank defense attorneys say the Pennsylvania-Ohio legal cluster could replicate itself across the country, particularly as the ADA suits fall within the framework of successful class actions filed over wheelchair ramps and other physical design issues.
"When you take a look at the motivation for class actions, [class action shops] get attorney fees and settlement fees, and the banks pay for this," says Mercedes Kelley Tunstall, of counsel, at Ballard Spahr.
The sole plaintiff in all of the suits to date is Robert Jahoda, a resident of Ambridge, Pennsylvania, and identified as blind in court documents. He, and a proposed class of similarly "situated" people, is represented by the law firm Carlson Lynch, of Pittsburgh.
Among the firm's other targets are The Home Savings and Loan Company of Youngstown, Charleroi Federal Savings Bank, Fidelity Bank, Farmers & Merchants Bank of Western Pennsylvania, as well one big name, PNC Financial Services Group (PNC).
"I and my law firm have filed a number of lawsuits calculated to cause compliance with the requirements of this law," Bruce Carlson, the lead attorney in the case, wrote in an emailed statement. Carlson declined to discuss the cases with American Banker directly.
"We expect that the lawsuits that we filed will achieve the objective of Congress in that they will cause compliance with a law that the industry has known about for an extended period of time," Carlson wrote.
There's some truth to that. Banks have struggled one way or another with regulations and standards for the visually impaired since 1990, when the ADA became law.
The current regulations, which were issued and approved by the Department of Justice in 2010, require that ATMs have audio jacks for voice instructions, provide for privacy for visually impaired customers, such as the blacking out of screens when audio components are used, and that they contain braille instructions, among other things.
Those are merely the most recent in a series of evolving standards mandated by the DOJ and U.S. Access Board, the federal agency responsible for examining accessibility. The American Bankers Association has been working with the blind community, ATM manufacturers, and the Access board on the development of new standards since the late 1990's.
Where comity hasn't worked, coercion has. Since 2000, more than a dozen top banks committed to upgrading their ATMs as part of legal setttlements with visually impaired customers.
"These are things that should not be a surprise to banks. There has been a lot of coverage and opportunities to be involved in the process of making the law and commenting on the law and now implementing the law," says Joyce Ackerbaum Cox, a partner in the labor employment group for law firm Baker Hostetler, of Cleveland.
Some bankers agree that they had plenty of time to get into compliance.
"While the rules were just finalized recently, they've been the subject of debate for over 10 years," Jonathan Velline, executive vice president of ATM banking and store strategy for Wells Fargo (WFC), wrote in an email.
Wells Fargo developed solutions for its visually impaired customers in 1999, and had fully deployed those solutions at all the bank's ATMs by 2005, Velline wrote. Wells made Wachovia’s 5,000 ATMs fully compliant in the two years following its acquisition in 2008, a Wells representative says.
Still, the costs of the regulations are big, and those costs can fall disproportionately on the smaller banks, experts say.
Banks must make all of their ATMs accessible to the visually impaired. That contrasts with other disabilities included in ADA regulations, where typically just one ATM per location must be accessible, say for people confined to wheelchairs, experts say.
There are 405,000 ATMs in the U.S., according to Aite Group. Banks own about 285,000 of those, and independent service organizations own the remainder. (ISOs must also comply with the updated regulations.)
Banks must change either the entire machine, or they can replace hardware parts or software components. ATMs can typically last up to 20 years, and many older machines simply don't offer the functions necessary for ADA compliance.
In those cases, it's likely banks will have to do a rip and replace. State of the art ATMs will cost $50,000, but stripped down cash dispensers that are compliant with new regulations can cost as little as $10,000, ATM vendor NCR (NCR) says. For newer ATMS outfitted with the proper hardware, software upgrades can cost in the low thousands of dollars.
While Jahoda's and Carlson Lynch's raft of lawsuits might seem mercenary, few banks would argue with the proposition that the blind deserve full access to bank ATMs.
"We are entitled to the same convenience that everyone else has, particularly as more people use ATMs and banks cut back on branch services," says Chris Danielsen, a spokesman for the National Federation for the Blind, an advocacy group that sued ATM manufacturer Diebold (DBD) in 2000 to get it to start manufacturing ATMS that would be more accessible to the blind.
(Diebold settled with NFB in 2002 and agreed to develop voice guided ATMs in 2002.)
Activity that most people without visual impairments take for granted, such as getting cash in seconds from an ATM, can cause huge headaches for the estimated 3 million visually impaired adults in the U.S.
"If you talk to the average blind person out there, you still find that they routinely encounter machines that don't work [for them]," says Danielsen, who is blind.
For the banks, class action suits such as the one Commonwealth is now caught up in can have lingering and costly effects that many companies can ill-afford.
That may seem counter-intuitive, as the purpose of ADA lawsuits is not to provide a punitive reward, but injunctive relief. The real consequence can be years of oversight meted out through consent decrees where the plaintiff's law firm gets thousands of dollars in fees, including from third parties monitoring compliance, experts say.
"With ADA class actions, you will often see the settlement has ongoing compliance requirements with a third party coming in and checking that the bank remains remediated, and the plaintiff's lawyer gets between $5,000 and $25,000 in annual fees for reviewing the results," Tunstall says.
Fidelity Bank, a unit of Fidelity Bancorp (FSBI), of Pittsburgh, which Carlson Lynch sued in April, is grappling with that set of issues now.
Though Fidelity and Carlson reached an agreement and closed the case May 21, according to court documents, Fidelity's consent decree requires it to complete ATM modifications currently under way, to inspect its ATMs at least twice a month to confirm compliance, and to create a written policy of compliance that must be sent to Carlson Lynch.
The decree also states that Fidelity agrees to the recovery of fees arising from any subsequent actions where it does not prevail, and gives the plaintiff's counsel a year to independently test the ATMs. If any issues are found, it will submit to a new year-long examination.
(A Fidelity spokesman declined to comment on the case.)
"Failure to comply with a consent decree can result in the plaintiff seeking a contempt order, and depending on the terms of the settlement, there could be a monetary sanction, as well as whatever else the court would order," Ackerbaum Cox says.