Massachusetts Federal Court Agrees with Defense that Class Action Complaint Failed to Prove Damages under EFTA (Electronic Funds Transfer Act) and State Consumer Protection Law Claims Because ATM Users Expressly Consented to Fee Charged and Because Bank of America did not Always Charge Non-Customers the Fee
Plaintiff filed a putative class action in Massachusetts federal court against Bank of America alleging that notices posted by the bank on its ATM machines in California, Maryland, Massachusetts and Rhode Island violated the federal Electronic Funds Transfer Act, 15 U.S.C. § 1693 (EFTA), as well as certain state consumer protection laws. Brown v. Bank of America, N.A., 457 F.Supp.2d 82, 84-85 (D. Mass. 2006). In part, plaintiffs complained that the Bank advised non-customers that it “may” charge them a fee when, in point of fact, it always charged them a fee (and thus should have disclosed that it “will” charge the fee). Defense attorneys moved for summary judgment on the state law claims and for partial summary judgment on the federal law claim. Id. The district court granted the defense motion as to the state law claims, and also agreed with defense attorneys with respect to the “verb choice” argument under the EFTA claim.
The genesis of the class action complaint is that while Bank of America permits its customers to use its ATMs for free “most, but not all, non-customers seeking to withdraw money from a Bank of America ATM must pay a small fee to the bank for the service.” Brown, at 84. The Bank gives notice of the fee in two ways. First, it posts decals on each ATM that states, in part, the Bank “may charge a $1.50 fee for a cash withdrawal from your NON-Bank of America account.” Id., at 84-85. Second, as part of the on-screen “click-through” process, the Bank requires users to affirmatively consent to the fee. Id., at 85. The class action complaint alleged that the Bank’s notice violated federal law because the regulations governing the EFTA require “notice that a fee will be imposed for providing electronic fund transfer services or a balance inquiry” and disclosure of the amount of the fee. Id., at 86 (quoting 12 C.F.R. § 205.16(b) (2005) (Regulation E)). This “improper notice” also underlies the state consumer protection law violations.
Beginning with the state law claims, the defense argued that the court need not concern itself with whether the language or location of the notice is adequate because the undisputed facts defeat any claim of actual injury. Brown, at 89. Specifically, the consumer state laws at issue require actual loss, but the Bank’s ATMs “all require that a customer consent to the assessment of a fee before the Bank will levy a charge,” id. Accordingly, because “every class member knows about the fee before it is assessed and . . . every class member assents to the transaction,” plaintiffs cannot establish any damage resulting from the language used in the notice or the placement of the notice. Id., at 89.
As to the EFTA claim, Plaintiffs’ argued that the Bank was required to disclose that the fee “will” be charged because it was “overwhelmingly likely” – at least in certain circumstances – that the fee would be charged, id., at 87. The district court noted that Regulation E had been amended February 2006 to permit banks to disclose that a fee “may” be charged so long as there are circumstances when the fee will not be charged. Brown, at 86 (citing 12 C.F.R. § 205.16(c)(1)(ii) (2006)). The federal court held that the amendments to Regulation E may be given retroactive consideration because the agency was merely interpreting existing law, id., at 87, and that “giving great deference to Regulation E, the Court concludes that of EFTA does not require the use of ‘will’ with on-machine notice provided that there are circumstances in which the operator does not assess a fee,” id., at 88-89. Accordingly, the defense was entitled to summary judgment as to the “verb choice” claim because, as a matter of undisputed fact, there were circumstances under which the Bank would not charge non-customers a fee for use of its ATMs. Id.
With respect to the “placement” claim alleged in the class action complaint, plaintiffs argued that the notice was not “prominent and conspicuous.” Brown, at 90. The federal court agreed with defense attorneys that plaintiffs “cannot establish causation of harm in the form of detrimental reliance in this case under the placement claim” because, as with the state court claims, users must affirmatively consent to being charged a fee by the Bank as part of the on-screen “click-through” process. Id. Accordingly, the Bank also was entitled to summary judgment as to this alleged violation of the EFTA.