ATM Operating Rules and Regulations

Rules and Regulations of Operating an ATM

ATM Operating Rules and Regulations

As with most transactions dealing with banking, there are rules and regulations that must be followed. Operating an ATM (automated teller machine) is no different. If the machine is located on a bank’s premises or operated by the bank at different locations, both state and federal rules and regulations will apply. For privately owned ATMs, there are still regulations, but they vary from those of banks.

ATM Operating Rules and Regulations for a Bank Operated ATMs?

  •  Video Surveillance:  Banks using an analog video surveillance system must follow federal law requirements. The systems must use videotape that is of commercial or industrial grade. It is recommended that the tape only be used one time from beginning to end and within a 30-day period. Once the tape is full, the bank must retain the video surveillance for a period of at least 45 days. After this time, the tapes can be recorded over, but should not be used more than 12 times. Many ATMs are now sold with a built in surveillance system, most of which are digital recording systems.
  • Safety Regulations:  U.S. Federal Laws are in place for banks operating an ATM, mainly the Federal Electronic Funds Transfer Act and the Bank Protection Act. These laws are in place for security purposes; however, the laws address the security of the ATM itself, not the safety of the user. Although they must still abide by the U.S. Federal Laws, many states have but their own regulations into place for the safety of their customers. States such as, California, Florida, and New York, to name just a few; have passed laws of security standards for ATM operators. Standards have been set for lighting, visibility, security, and landscaping at ATM locations.
  • Fees: According to the Electronic Fund Transfer Act (Regulation E), the owner of an ATM was required to both post a physical notification and an on-screen notification that a fee is charged for providing the service of its machine. The physical notice was to be posted on the machine or somewhere visible to a user at the machine. This was most commonly in the form of a sticker on the ATM. On December 20, 2012, the December 2012 Statutory Amendment was approved, which only requires the on-screen disclosure now. Most ATMs still post the physical notice, but are no longer required to do so. Unlike the posted notification, an on-screen notification of fees must include the dollar amount of the charge. This notification offers the user to accept and continue the transaction or to deny the fee and end the transaction.

These are just some of the simple, most common regulations in place for bank owned ATMs. For more detailed information on these and other laws, you can research the Electronic Fund Transfer Act (EFTA), the Federal Electronic Funds Transfer Act and the Bank Protection Act, and U.S. Federal Laws regarding ATMs.

ATM Operating Rules and Regulations for Non-Bank Owned ATMs?

Non-bank owned ATMs have a different set of ATM operating rules and regulations to follow; and are a lot simpler.

  • These machines are only allowed to dispense cash; no deposits are accepted at these locations.
  • They must display, on the ATM, the logos of the types of cards that are accepted at their machine.
  • The owners of the ATM can charge customers a fee for their transaction; however it must clearly be posted at the machine as well as on-screen during the withdrawal transaction.
  • All non-bank owned machine owners are required to file an annual notice of ownership which is typically done through the ATM processor they signed up with.
  • Some States have their own set of non-bank regulations, check with your ATM Company to be sure they manage this process for you.

Voice Activated ATMs and New ADA Requirements

Voice Activated ATMs and New ADA Requirements

Voice-activated automatic teller machines were designed to help people with visual impairments, including some elderly people, make financial transactions. Not every blind person can read Braille, and so ATM’s equipped with Braille keypads don’t always suffice. In addition, Braille keypads may allow blind people to enter the information they need to, but they don’t provide a means of delivering directions to visually-impaired customers. So unless a blind person were to walk into a bank already knowing exactly how to use the ATM, it might not be possible for him or her to make transactions without assistance from a bank employee. And waiting in line to ask an employee for help can be time-consuming, not to mention embarrassing. Indeed, in the past, some visually-impaired people tended to avoid ATM’s altogether.

However, a voice-activated ATM solves most, if not all, of those problems. Such a machine works like this:

  • A customer plugs his or her headphones into the ATM’s universal audio jack.
  • The ATM’s voice activation system is triggered.
  • The machine begins to speak to the customer, giving instructions, telling him or her which keys need to be pressed in order to complete a certain transaction.
  • The automated voice may also explain how to use the ATM’s Braille keypad, in case that customer does know how to read Braille.

Voice-activated ATM’s are not new. Banks large and small began rolling out this technology early in the first decade of the twenty-first century. For example, all new ATM’s purchased by Australian banks since 2003 have been voice-activated; banks in that nation began installing voice-activated ATM’s as part of a pilot program in 2002. Also in 2002, Banknorth, a small American chain of banks with headquarters in Portland, Maine, began to install voice-activated ATM’s in 400 of its banks, a program that was completed in cooperation with the National Federation of the Blind. In the end, Banknorth – now TDB Banknorth – spent five years and almost five million dollars to get these machines operational.

TDB Banknorth and others may have voluntarily set up voice-activated ATM’s, but today doing so is no longer optional for financial institutions in the United States; it’s mandatory. That’s because, between 2004 and 2010, the U.S. Department of Justice handed down a series of rulings on the issue of voice-activated ATM’s. The result of these decisions was that, as a new stipulation of the Americans with Disabilities Act, or ADA, all banks, credit unions and other financial institutions were required to install at least one voice-activated ATM in every location where they maintained ATM’s. The deadline for these installations was set at April 30, 2012 – the deadline had originally been March 15 of that year, but was extended to give banks enough time to purchase and install these devices. (These rulings came with other requirements for ATM’s as well, including guaranteed wheelchair access.)

It’s interesting to note that the estimated cost of a single voice-activated ATM can vary widely, depending on whether you ask a financial institution or you ask an advocacy group for the visually-impaired, such as the aforementioned National Federation for the Blind. But it’s somewhere between $1,000 and $10,000. Still, whatever the cost may be, most banks found it more economical to purchase entirely new machines rather than update old ATM’s with new software and processing capabilities.

Financial institutions which are not in compliance with the ADA’s voice-activated ATM standards risk lawsuits and other disciplinary measures. Still, in many parts of the country, some banks have yet to fully comply with the new law. In 2012, for instance, a visually-impaired, 30-year-old man name Robert Jahoda filed federal lawsuits against several banks in his home state of Pennsylvania, as well as a bank in Ohio, because they had not yet equipped their facilities with voice-activated ATM’s. Further, a Boston-based consumer protection website called Consumer World conducted a study one month after the voice-activated ATM law’s April 2012 deadline. Consumer World’s researchers traveled around Boston, plugging headphones into random samplings of ATMs all over the city. And the results of this survey were not too impressive: at least a quarter of the automatic teller machines that these researchers tried out did not have a voice activation capacity.

Senate Passes ATM Fee Disclosure Bill H.R. 4367

Senate Passed ATM Fee Disclosure Bill

It was announced late Tuesday evening, December 11, 2012 that the Senate passed bill H.R. 4367, the bill to end the ATM dual fee notification requirement under Regulation E and protect ATM operators from frivolous lawsuits.

This bill will now be passed on to President Obama and will be effective upon his signature.

Note that it is still critical that signage be affixed to every ATM Machine and photo’s be taken with date-stamp (to keep on file) should any lawsuit be filed prior to the bill becoming law.  Proof of installed placards (signage) is your security to prove you installed it and vandals or others removed it to file the suit.  ATM operators must continue to protect themselves until this bill actually becomes law.  Visit our blog to keep informed of any new development.

For a rundown of Regulation E and Bill 4367 watch the presentation below.