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Commentary: EFTA legislation is great. ADA legislation is better.

 A House bill to kill the ATM placard notice is pending. But the larger issue is a legal system that panders to greed.

April 19, 2012 by Suzanne Cluckey — Owner, Suzanne Cluckey Communications

On Tuesday of this week, U.S. Rep. Blaine Leutkemeyer, R-Mo., introduced a bill to scrap the ATM dual fee notification requirement (Reg E) of the Electronic Funds Transfer Act. Rep. David Scott, D-Ga., is co-sponsor of the bill, H.R. 4367.

It's gratifying to see legislation introduced so soon after the Group of Eight (ABA, AGA, ATMIA, CUNA, EFTA, ICBA, NACS, NAFCU) dispatched its Feb. 8 letter to Congress, requesting relief from the fee placard rule. Of course far more effort than a single letter has gone into pushing this particular rock up The Hill. Still, we haven't seen legislation crafted this fast since Jimmy Stewart and Jean Arthur wrote up the Boy Rangers camp proposal overnight in "Mr. Smith goes to Washington."

It's also heartwarming to see reps from opposite sides of the aisle working together on a piece of legislation. Or on anything, actually. As poisonous as the air has become on Capitol Hill, it's not certain that Congress could co-sponsor a bedtime reading of "Goodnight Moon" to a two-year-old.

Leutkemeyer and Scott both serve on the House Financial Services committee, which will be the starting point of H.R. 4367's long day's journey through the legislative process. But with national elections coming up in the fall, not much legislating will happen for the rest of the year. In other words, don't break out the party hats quite yet.

For the ATM industry, congressional action can't happen fast enough. For years, endless and expensive compliance measures, proofs of compliance and the persistent threat of being sued despite the best of efforts have been a pox on the industry's house.

H.R. 4367 would remove the threat by requiring, sensibly, that ATM operators give notice of fees onscreen before a transaction is processed and offer the cardholder the choice to: a) accept the transaction fee; or b) decline the fee and terminate the transaction. Nothing could be simpler or clearer. Or more repellent to a certain class of lawyers.

And this goes to an issue more intransigent than the fee placard rule. Because when the industry defuses Reg E (and it will), there's still the even trickier minefield of the ADA. At the bottom of it all are government regulations whose unintended (let's assume) consequences are the support and encouragement of the ugliest kind of greed.

Reasonable people would agree that laws designed to protect the vulnerable and accommodate the disabled play an essential role in civil society. They are part of what makes a society civil. But if it's callous to brush aside the disadvantaged, it's nothing short of cold-blooded to use them as tools for personal gain.

This week, I read an article in the New York Times about a "flood" of ADA suits filed against businesses in the city, most of them small and owner operated. One particular line in this article struck me: "Because the settlements are invariably bound by confidentiality agreements, it is impossible to calculate the precise amount lawyers earn in total."

The fact that attorney's fees aren't divulged is not an effect of the confidentiality agreement. As far as I can tell, it is the purpose of it. No other party to an ADA suit has nearly the motivation to demand secrecy. Not the plaintiff whose award in an ADA suit is small. Not the merchant, whose payout is in attorney's fees, not damages.

According to The Times, one Florida-based lawyer has closed more than 106 suits in New York City, recruiting plaintiffs at meetings for the disabled. He has used one plaintiff in 143 suits. Another of his plaintiffs has been involved in five suits — all against businesses she has never patronized. An attorney who defended a merchant in one of these suits said a client paid $6,000 in fees to the plaintiff's attorney. Multiplied by 106, that's almost $640,000. Not bad for what amounts to an assembly-line job.

The confidentiality in which ADA lawsuit factories cloak themselves creates a Catch-22 for the entire business community. Transparency about fees would have a palliative effect of its own, generating enough public outrage to shut down the practice through legislation. But because of confidentiality agreements, outrage is absent and the practice goes on.

One highly effective way to shut down frivolous ADA suits would be to give business owners a reasonable amount of time to correct an ADA violation. If the owner fails to make the fix or show why it constitutes an undue financial burden, then fine. Sue 'em.

Legislators are taking note of the situation. Recently, U.S. Sen. Dianne Feinstein, D-Calif., gave notice to the California legislature that if they didn't address the issue of trivial lawsuits, she would do it for them at the national level.

Currently, H.R. 881: ADA Notification Act of 2011, sits in the House Subcommittee on the Constitution awaiting a slow death. The resolution, submitted by Rep. Duncan Hunter, R-Calif., advocates a 90-day remedial period for ADA complaints. Numerous similar bills in the past have met with a similar fate.

Meanwhile petty legal action continues to choke the life out of businesses. According to Sam Ditzion, CEO of Tremont Capital Group, more than half of the ATMs in the U.S. remain non-compliant with the new ADA regulations. The majority of the violations, he said, are matters of placement and measurement that operators aren't even aware of. But they can be sure many lawyers are looking for them.

In the short term, EFTA changes are a good thing for the industry. In the long term ADA fixes will be an even greater thing. Contact your congressperson at writerep.gov and encourage him or her to support the EFTA legislation. And keep the Internet address — just in case the House decides not to let H.R. 881 expire in committee.

For more on this topic, visit our regulatory issuesresearch center

About Suzanne Cluckey

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Suzanne’s editorial career has spanned three decades and encompassed all B2B and B2C communications formats. Her award-winning work has appeared in trade and consumer media in the United States and internationally.