The opinion of the court was delivered by: Honorable Richard J. Arcara United States District Judge
The plaintiffs, Sarah Archbold and Donald W. Marvin, bring this action pursuant to the Court's federal-question jurisdiction, 28 U.S.C. § 1331, for damages and financial penalties under the Electronic Fund Transfer Act, 15 U.S.C. § 1693, et seq. ("EFTA"). Plaintiffs allege that the defendants, Solutions Federal Credit Union ("Solutions") and unknown participants Does 1-10, violated the EFTA by charging plaintiffs $1.50 on three occasions to use an automated teller machine (the "ATM") without required notice.
The action is before the Court on defendant Solutions' motion to dismiss plaintiff Archbold's and Marvin's amended complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim upon which relief can be granted. Defendant contends that a "$1.50 Foreign Transaction Fee" sign posted near the ATM was legally-sufficient notice of the fees plaintiffs were charged.
For the reasons stated below, the Court finds pursuant to Fed. R. Civ. P. 12(b)(6) that plaintiff Archbold's and Marvin's amended complaint states a claim that the exterior notice at defendant Solutions' ATM of a "$1.50 Foreign Transaction Fee" did not disclose the fees in the "readily understandable language" required by 12 C.F.R. § 205.16(c) and 15 U.S.C. §§ 1693c(a)(4), (10) and 1693b(d)(3)(B). The Court therefore denies defendant's motion to dismiss the amended complaint for failure to state a claim.
In light of the Court's evaluation of the action on defendant Solutions' motion to dismiss, the Court also enters a schedule for filings pursuant to Fed. R. Civ. P. 56(f)(3) so that the Court may consider partial summary judgment as against each party. A substantial narrowing of issues for discovery and trial may be possible.
When addressing a motion to dismiss pursuant to Fed. R. Civ. P. 12(b), the Court assumes well-pleaded factual allegations in a complaint are true. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). On July 16, 2011, plaintiff Marvin withdrew $20 from an ATM operated by defendant Solutions located at 907 Broadway Street, Elmira, New York. Amend. Compl. ¶¶ 24. Although defendant charged plaintiff an "ATM Owner fee" of $1.50 for the withdrawal, defendant did not provide notice of a terminal usage fee on or near the exterior of the ATM. Id. ¶¶ 26-27. Instead, a sign near the ATM indicated there was a "$1.50 Foreign Transaction Fee." Id. ¶¶ 27.
On February 11, 2012, plaintiffs Archbold and Marvin, at separate times, each withdrew $20 from the same Solutions automated teller machine. Amend. Compl. ¶¶ 28. Again, the ATM charged the plaintiffs a $1.50 "ATM Owner fee" for the withdrawals. Id. ¶¶ 30. The ATM again had no exterior notice indicating a terminal usage fee might be incurred. Id. ¶¶ 35. The only exterior notice was for a "$1.50 Foreign Transaction Fee." Id.
Plaintiffs Archbold and Marvin received notice of each "ATM Owner fee" because of the ATM's on-screen notice and paid the $1.50 fees when prompted to do so by the on-screen notice. See Amend. Compl. ¶¶ 26, 30, 34, Exs. 3 - 4, 5, 9. Plaintiffs contend the external notice of fees referring to a "$1.50 Foreign Transaction Fee" was insufficient notice under the EFTA. Id. ¶¶ 27, 31, 35.
Plaintiffs Archbold and Marvin seek $4,000 in actual damages in addition to a $1,000 statutory penalty for each of their three transactions using the Solutions automated teller machine. Amend. Compl. p. 17. Plaintiffs also seek costs and attorney's fees. Id. They filed their amended complaint and demand for a jury trial on May 29, 2012.
The "primary objective" of the Electronic Fund Transfer Act, 15 U.S.C. § 1693, et seq., is to protect individual consumer rights by "provid[ing] a basic framework establishing the rights, liabilities, and responsibilities of participants in electronic fund and remittance transfer systems." 15 U.S.C. § 1693(b). Among its consumer-protection provisions, the EFTA limits a consumer's liability for the unauthorized use of an electronic fund transfer card, 15 U.S.C. § 1693g, prohibits the unsolicited issuance to a consumer of an electronic fund transfer card, 15 U.S.C. § 1693i, and requires that certain specific disclosures be made to consumers of the terms and conditions of electronic fund transfers and balance inquiries, 15 U.S.C. § 1693c. See generally 12 C.F.R. Part 205 (Regulation E.) The EFTA provides a private right of action for violations of the EFTA that includes recovery of actual damages, a mandatory-minimum statutory penalty of $100 and a maximum penalty of $1,000, costs, and attorney's fees. 15 U.S.C. § 1693m.
A. Fee-Notice Requirements of the EFTA. The EFTA requires an automated teller machine operator to notify a consumer that a fee will be charged for an ATM transaction or a balance inquiry and to disclose the amount of the fee. 12 C.F.R § 205.16(b); see 15 U.S.C. § 1693b(d)(3)(A). Two levels of notice are required and the consumer must be free to decide, after receiving the notices, whether to proceed to incur a terminal usage fee. 12 C.F.R § 205.16(c); see 15 U.S.C. § 1693b(d)(3)(B). Specifically, 12 C.F.R. § 205.16(c) sets forth the two distinct forms of fee notice:
(c) Notice requirement. To meet the requirements of paragraph (b) of this section [requiring notification of a terminal usage fee and the amount of the fee], an automated teller ...