Let's Remember the Real Victims Behind the ATM Sign Rule

Lost in the hype surrounding Monday's House vote to repeal of the long-standing requirement that automated teller machines bear physical notices of their usage fees is a reflection on the reason why banks were forced to post the notices in the first place.

Congress took this action almost 20 years ago to protect consumers from banks' widespread practice of dishonestly presenting inflated "available balances" to depositors making cash withdrawals at ATMs. The practice was designed to trick depositors into inadvertently overdrawing their accounts while generating revenues for banks.

Banks presented consumers with a "padded" balance that combined available cash and credit the banks were willing to extend. But the banks did not distinguish between the two sources of funds. And they did not warn depositors that withdrawals in excess of available funds would incur fees.

How ironic to see banks complain about being victimized by nuisance lawsuits filed by consumers over missing warning notices at ATMs – notices that were required to stop banks from victimizing consumers with nuisance charges at ATMs without warning.

Jim Wells is president of Wellspring Consulting International, which focuses on expanding access to financial services for consumers who do not use traditional depository institutions.