7th Circuit Reverses Denial of Class Certification in ATM Fee Lawsuit


While many people grumble about paying the exorbitant ATM fees that are being charged these days, few people know that there may be legal recourse. Until recently, the Electric Funds Transfer Act required ATMs charging a fee to provide two notices to customers: one notice in a sticker on the ATM, and another notice on the screen during the transaction. The Act has since been amended so that only the onscreen notification is required. However, during the time that both notices were required, Kore of Indiana Enterprise allegedly failed to provide one of these notices on two ATMs that they owned.

Kore owned ATMs in two bars in Indianapolis, which are allegedly popular with college students. Kore allegedly failed to post a notice that it charges a fee for each use of the ATMs. David Hughes sued Kore on behalf of himself and everyone who had used the ATMs during the time that the Electric Funds Transfer Act required two notices of an ATM fee. The lower court denied his motion for certification for class status, and Hughes appealed.

A plaintiff in an individual suit of this kind is entitled to actual damages or to statutory damages of anywhere from $100 to $1000. In the case of a class action lawsuit, the amount of damages is left to the discretion of the judge but cannot exceed $500,000 or 1 percent of the defendant’s worth, whichever is smaller. If the plaintiffs are successful, it is also the judge’s responsibility to award “a reasonable attorney’s fee” which the defendant would also pay.

In this class action lawsuit, the limit to the damages would be $10,000, since that is 1 percent of Kore’s worth. In the time period that this case covers, there were more than 2800 transactions at the two ATMs. The damages for a class action would this be at most $3.57 per transaction. If each class member only engaged in one transaction, that would leave 2800 class members who are each entitled to no more than $3.57.

The district judge decertified the class for two reasons, the first reason being that the class members would do better to bring individual suits, since they are entitled to at least $100 in an individual lawsuit. The $100 to $1000 range for statutory damages appears to be per suit rather than per transaction. However, individual lawsuits of this kind are unlikely to make it to court since $100 is such a small reward to sue for.

The judge’s second reason for decertifying the class was that the requirement of providing notice to class members could not be satisfied since the ATMs do not store user names. They track each transmission with a 10-digit identification number. The first six digits identify the user’s bank while the last four identify the user. To attach names to these numbers would require subpoenaing each bank that is identified. Since these ATMs were used largely by college students, this could involve subpoenaing hundreds of banks from students’ home towns.

Since distributing $3.57 to each class member would provide no real relief to the plaintiffs, the best solution, according to the appellate court, may be a “cy pres” decree. This is when the money the plaintiffs are awarded in a case goes to a charity whose work coincides with the interest of the class. In this case, the money could be given to a foundation that deals with consumer protection. Such a foundation could do much more with $10,000 than each class member could do with $3.57. Another purpose of a cy pres is to prevent the defendant who violated a statute or otherwise engaged in wrongdoing from getting away without punishment when distribution of the award to the class members is unlikely.

The US Court of Appeals for the Seventh Circuit reversed the lower court’s decision refusing to certify the class and remanded the case for further proceedings.

The Chicago class action attorneys at Lubin Austermuehle have decades of experience representing consumers throughout the greater Chicago area and the Mid-West region, including Illinois, Indiana, Wisconsin and Iowa. Class action lawsuits give consumers a way to assert their rights in cases of consumer fraud, even if they lack the resources individually to fight a much larger opponent. Please contact us today online, at (630) 333-0333, or at 630-333-0333 to schedule a confidential consultation with one of our Aurora class action attorneys.

Contact Information