Under Regulation E, what kind of disclosure is necessary when a third party venue charges a service fee for use of an ATM that we own and operate, where we pass that fee on to the customer?

We believe that you would be able to disclose fees charged by the proprietor of property in which you own an ATM, but we also recommend discussing the initial disclosure and any marketing language with bank counsel. (And, of course, all ATMs should on-screen notices that a fee will be charged and the amount of the fee, in compliance with 12 CFR 1005.16(b).)

Regulation E requires that you initially disclose “[a]ny fees imposed by the financial institution for electronic fund transfers or for the right to make transfers.” 12 CFR 1005.7(b)(5).

You must disclose ATM fees that will be paid by the consumer but imposed by the interchange ATM system operator, even if the bank ultimately pays the fees to the ATM operator. Comment 3, Official Staff Commentary, 12 CFR 1005.7(b)(5) : “Fees paid by the account-holding institution to the operator of a shared or interchange ATM system need not be disclosed, unless they are imposed on the consumer by the account-holding institution. Fees for use of an ATM that are debited directly from the consumer’s account by an institution other than the account-holding institution (for example, fees included in the transfer amount) need not be disclosed.”

The term “shared or interchange ATM system” refers to a system “which provides access to terminals operated by other financial institutions,” according to the OCC’s Regulation E Handbook (p. 11, or p. 14 of the .pdf file).

While the entity charging the fee is not a “shared or interchange ATM system,” but is instead the proprietor of the ATM’s location, we believe that you should similarly disclose the proprietor’s fee if is passed on to and imposed on the consumer. As to marketing your deposit accounts, we recommend some caution. Marketing accounts as “free” or with a statement that you will not charge ATM fees could bring some risk of a consumer bringing a UDAAP claim. We recommend consulting with bank counsel to disclose and market the fees so that you comply with Regulation E avoid any unfair, deceptive, or abuses practices.

Also, we note that Regulation E does not require that banks post their names on ATMs and requires only that they disclose any fees charged. See 12 CFR 1005.1612 CFR 1005.9. The Illinois Electronic Fund Transfer Act does require that banks post a fee notice on their ATMs that includes, among other information, the name of the bank operating the terminal. 205 ILCS 616/5038 Ill. Adm. Code 315.140. However, it also provides that compliance with federal law, including the Regulation E requirements described above, will be deemed to be compliance with the Illinois requirements. 205 ILCS 616/55IDFPR Interpretive Letter 06-01.