Article

Commentary: Who's really calling the shots on ADA for the ATM industry?

A Massachusetts district court judge's order against Cardtronics should have the entire ATM industry up in arms.

March 25, 2013 by Suzanne Cluckey — Owner, Suzanne Cluckey Communications

A federal judge in Massachusetts last Thursday ruled that Cardtronics had failed to meet a twice-extended deadline relating to a 2007 settlement of an ADA complaint dating back to 2003.

As a result of the judge's findings, Cardtronics could be subject to significant fines across its entire nationwide network. But should it be? Is it fair? Or even reasonable? If so, what's the point of federal standards?

Some background

The settlement stemmed from a class action suit brought by the National Federation of the Blind and the Commonwealth of Massachusetts alleging ADA infractions by Cardtronics.

It's important to note that while features of the 2003 case are ADA-related, the judge's recent order should not be construed to mean that Cardtronics ATMs are not in compliance with ADA standards enacted last year.

"In terms of Cardtronics as an ATM owner-operator in the United States, we're 100 percent compliant," Cardtronics spokesman Nick Pappathopoulos told ATM Marketplace in a phone conversation. "We've done our duty as an owner-operator. All Cardtronics-owned and –operated ATMs have been fully compliant with current ADA standards since the implementation of the new rules on March 15, 2012."

So what's the problem?

In 2007, before expected revised ADA guidelines for ATMs were even available to ATM operators (not to mention clarified), Cardtronics agreed to a settlement in the Massachusetts case.

It was untenable from the first. The settlement stipulated that in addition to ATMs that it owned and operated, Cardtronics would take responsibility for merchant-owned ATMs for which the company merely provided transaction processing:

Cardtronics will identify the smallest subset of Merchant-Owned ATMs without voice guidance that collectively account for 80% of transactions at Merchant Owned ATMs ("High Volume Merchants") and will, within ninety (90) days of approval, offer those merchants that have Upgradeable ATMs the opportunity to upgrade to add voice guidance at no cost, and will offer those merchants whose machines are not upgradeable the opportunity to purchase a voice-guided machine at Cardtronics's wholesale cost. (Settlement Agreement, 3.2.2.)

Short of trundling a compliant ATM into a retail location and swapping it out with the merchant-owned machine at no charge, Cardtronics had no means to ensure merchant compliance with the settlement.

Other provisions of the final settlement were also problematic:

After July 1, 2010, Cardtronics will not add or renew any merchant-owned ATMs that are not voice-guided. so that any remaining ATMs constituting less than 10% of transaction volume that are not yet voice-guided will either become so or be eliminated. (Settlement Agreement, 3.3.2.)

Ten percent of Cardtronics' transaction volume? How many ATMs could that be? (Ten, tops.) The company could have been obliged to discard hundreds, if not thousands, of processing accounts for merchants who refused to pay to make their ATMs compliant with the court's ruling.

Remediation: deadlines and penalties

Apparently recognizing that it had sent Cardtronics on a snipe hunt, the court granted approval to a remediation plan on May 18, 2010, that outlined 10 specific actions to be taken by Cardtronics, including the following (ellipses replace language specific to 7-Eleven and Target):

(3) All Cardtronics-owned ATMs nationally will be Voice-guided no later than December 31, 2010 ...

(5) With the assistance of the NFB, Cardtronics has developed enhanced scripts for the great majority of the ATMs it owns ... [O]n or before December 31, 2010 Cardtronics will install enhanced scripts on all Cardtronics-owned ATMs, except where it is not technologically feasible to do so, in which cases, on or before December 31, 2010, Cardtronics shall either (i) replace such ATMs with ATMs on which an enhanced script can and will be installed, or (ii) remove such ATMs from the Cardtronics-owned fleet …

(6) … by December 31, 2010, all Cardtronics-owned Voice-guided ATMs and those merchant-owned, Voice-guided ATMs that Cardtronics designates as making up a portion of the ninety percent (90%) transaction requirements ... will have tactilely discernible controls, that is, operating mechanisms used in conjunction with speech output that can be located and operated by feel. When a numeric keypad is part of the tactilely discernible controls, all function keys will be mapped to the numeric keypad and … the numeric keypad will have an "echo" effect such that the user's numeric entries (other than the entry of a personal identification number) are repeated in voice form …

(7) … [B]y December 31, 2010, all Cardtronics-owned ATMs will have appropriate signage as identified in the Final Order Ex. 1.2 … By December 31, 2010, Cardtronics will send such signage to each of its Merchant-owned customers that operate a Voice-guided ATM (with the exception of those customers for whom Cardtronics physically placed Braille signage on each of the customer's Voice-guided ATMs after April 9, 2007) requesting that those customers install such signage on their Voice-guided ATMs. Cardtronics will include a letter from the NFB describing the importance of such signage with its request …

In his March 21 order, Judge Nathaniel M. Gorton of the United States District Court District of Massachusetts chastised Cardtronics for having "consistently failed to meet their agreed-upon deadlines … Defendants’ continued failure to satisfy their obligations to plaintiffs and to this Court leave it with no alternative but to impose civil sanctions … "

In short:

• A special master will be appointed by the court to ensure Cardtronics compliance;
• The company's monthly reporting requirements will be extended through March 31, 2014;
• Cardtronics will pay attorney fees and plaintiff costs.

"The fourth condition, a monetary fine, will be assessed in some significant amount but the exact amount will be determined on the basis of an upcoming hearing," Gorton wrote in the order. The plaintiffs have requested penalties of $50 per non-compliant ATM per month — a potential monthly assessment of $450,000, based on their estimate of 9,000 non-compliant ATMs.

The next move

Following issuance of the judge's March 21 order, Cardtronics released a statement that reads in part:

"In addition to the industrywide requirements, Cardtronics operates under a settlement agreement with both the Commonwealth of Massachusetts and the National Federation of the Blind, which envisions additional accessibility features that go above and beyond the industry-wide requirements. Cardtronics, the Commonwealth and the NFB have had bona fide[s] contractual disagreements under the settlement, and also Cardtronics has had to overcome some technical and operational hurdles … "

Cardtronics will not comment on its next move in the Massachusetts case, but the assertion of "contractual disagreements" seems to indicate that the company is not hanging up its gloves quite yet.

In the meantime, Pappathopoulos' concern is that Cardtronics customers will think the judge's order means that their ATMs are out of compliance with the new ADA standards.

"There is a difference between being totally compliant with the settlement agreement and being totally compliant with ADA as a piece of law. We want our banking clients and our retailer clients where it's our machine … to know that yes, that's a compliant machine."

It's not just about Cardtronics

There are larger concerns arising from the March 21 order.  

First, should a U.S. District Court in Massachusetts enjoy the prerogative to impose rules and sanctions that extend outside the borders of the commonwealth to supersede standards established by the United States government and deemed appropriate and adequate by the remaining 49 states.?

Second, if these rules are enforceable nationally, why should they single out Cardtronics? The federal guidelines don't. Shouldn't Massachusetts' superseding ADA rules and sanctions apply not only to the largest operator in the United States, but also to every other ATM operator as well? 

If the answer to either of these is "yes," then owners need to ask themselves how long it will be before they're embroiled in this legal quagmire. it's not just Cardtronics — the entire ATM industry could be in for a world of hurt.

Read more about regulatory issues.

photo: patrick seabird

About Suzanne Cluckey

---

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.