ATM Fee Charges from Banks and Credit Unions: Who’s Affected?
Washington state banks and credit unions are being accused of charging improper ATM fees in violation of the Electronic Fund Transfer Act (EFTA).
ATMs are a convenient way for consumers to access money from their bank and credit union accounts any time of day without having to enter a bank.
Although they are an easy way to get cash, many consumers are finding that they are faced with unexpected ATM fees when they use an out-of-network ATM, which may be a violation of the law.
The Electronic Fund Transfer Act (EFTA) governs ATM transactions and requires ATM operators to provide notice that ATM fees will be charged when a customer withdraws or deposits money. Financial institutions like credit unions that break the laws established by the EFTA may be liable for damages.
A current lawsuit is investigating banks and credit unions in the state of Washington that may have allegedly violated the EFTA.
What is a Credit Union?
Credit unions are “a type of financial cooperative that provides traditional banking services” but “are significantly smaller in size than most banks and are structured to serve a particular region, industry, or group,” according to Investopedia.
With fewer brick-and-mortar locations than banks, credit unions conduct most of their services online and through auto-bill pay, offering a smaller range of services than most national banks. You can still withdraw cash from a teller or ATM through credit unions, just like with banks.
Read more: What Do Credit Union ATM Fees Cover?
ATM Fees Definition
ATM fees are one type of fee that credit unions can charge. Generally, credit unions will charge ATM fees when a customer uses an ATM that’s outside of their network or if the ATM belongs to a different credit union or bank.
ATM fees may be imposed for all types of transactions, not just withdrawals. Financial institutions may charge ATM fees when customers make deposits or balance inquiries at ATMs that are not within their network.
Out-of-network ATM transactions may actually lead to two separate ATM fees. The first will be a surcharge by your credit union or bank for using an ATM that is out of its network. The ATM operator may also charge a fee, which usually will be disclosed as a pop-up on the screen before you complete your transaction. Travelers who withdraw money from an ATM in a different country may also be faced with a foreign transaction fee.
The best way to avoid ATM fees is to use an ATM that is operated within your credit union’s or bank’s network.
Unfortunately, it’s not always possible to locate an ATM that’s within the network when you need cash right away. Network ATMs generally have lower fees than ATMs that are not operated by your credit union or bank.
How Much Are ATM Fees?
There is no set amount for ATM fees. The ATM fee will vary based on which credit union you use and the type of account you have.
The average cost to withdraw money from an out-of-network ATM was $4.69, according to a 2017 Bankrate report. The average ATM fee charged by ATM operators was reportedly $2.97. On average, banks charged $1.72 to customers who used an out-of-network ATM.
Some financial institutions will provide ATM fee reimbursements at the end of each statement cycle. However, even banks that offer ATM fee reimbursement may limit or restrict the amount they will reimburse an account holder each much.
These reimbursements may be limited to a certain dollar amount, such up to $10 ATM fee reimbursed each month, and/or set restrictions on the type of account holder who is eligible to have an ATM fee reimbursed. For example, the credit union may only issue ATM fee reimbursements to account holders who have a minimum daily average balance of $5,000.
Read more: How Can I Get ATM Fees Reimbursed?
What’s the Best Strategy for Avoiding ATM Fees?
The best strategy for avoiding ATM fees involves planning ahead, being creative and double-checking which banks charge for using out-of-network ATMs.
If you can focus your efforts on using an in-network ATM, then typically you should not be charged.
Read more: How to Avoid ATM Fees in the US
What Is the Purpose of the Electronic Fund Transfer Act?
The Electronic Fund Transfer Act, or EFTA, was implemented in 1979 as a way to protect consumers who manage their finances through electronic means, regulating banks, credit unions, and other service providers.
Under the EFTA, electronic fund transfers are defined as transactions that rely on phones, computers or magnetic strips to authorize a financial institution to withdraw money from or deposit money into a customer’s account. Direct deposits, debit cards, point of sale transactions, ATMs, and transfers initiated by phones are covered by the EFTA.
The EFTA provides consumers with the ability to challenge errors and have any errors addressed within 45 days. The law also requires that ATM fees are disclosed at the time of the fund transfer.
If a financial institution is notified about an error and they fail to correct the error or credit money back when necessary, they may be liable for damages. Consumers can take legal action under the EFTA and seek compensation for their losses as well as potential punitive damages against the financial institution for imposing illegal fees.
ATM Fee Class Action Lawsuits
Some consumers have taken legal action over credit unions and banks who have allegedly charged illegal fees when consumers use their ATMs.
Capital One NA was hit with a class action lawsuit in 2018 over allegations that it charged “unfair and unconscionable” ATM fees on balance inquiries from out-of-network ATMs.
In addition, the ATM fees Capital One class action lawsuit challenged the bank’s “deceptive, unfair and unconscionable assessment” of two ATM fees when an account holder conducted a balance inquiry prior to a cash withdrawal at an out-of-network ATM.
“Not only does the non-Capital One ATM operator charge the consumer a fee for the use of its ATM, a charge which now averages $3, but Capital One charges [an out-of-network fee] for a cash withdrawal as well—a punishing double-fee on account holders that can rise to a total of several dollars for simply accessing their own money,” the Capital One class action lawsuit states.
According to the ATM fees class action lawsuit, Capital One charged fees without notification that the consumer would be charged two separate fees and never informed the consumer the total amount of ATM fees they would be charged.
“For a simple out-of-network ATM withdrawal, for example, Plaintiffs paid a total of $7 for three separate fees, including $4 for two separate fees to Capital One,” the ATM fees class action lawsuit alleged.
The Capital One class action lawsuit sought damages, restitution and injunctive relief.
According to the Northwest Credit Union Association, “Credit unions that charge a fee for non-member ATM use must post a sign warning consumers of the fee and must meet certain other benchmarks to ensure compliance with Regulation E,” a set of rules and procedures for all electronic funds transfers put forth by the Federal Reserve board.
Should You File a Lawsuit for Being Charged ATM Fees Without Proper Notification?
If you were charged ATM fees by any of the banks and/or credit unions listed on this page without proper notification, you may have a legal claim.
Some of the reasons consumers have been charged improper ATM fees include the following:
- Making a withdrawal
- Checking your balance
- Depositing money
- Charged two fees for doing more than one of the above
Taking legal action against a financial institution that charged illegal bank fees will help to hold the bank or credit union accountable for wrongdoing and potentially secure compensation for consumers who have been charged improper ATM fees.
Attorneys are currently seeking consumers who were charged unexpected ATM fees by banks and/or credit unions in the state of Washington to potentially serve as a plaintiff in a class action lawsuit.
Submit your information now and if you qualify, an attorney will contact you for a free case evaluation.
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