DES MOINES, Iowa -- Five national banks -- Metrobank, Wells Fargo Bank Iowa, Bank of America, Firstar Bank and U.S. Bank -- filed a lawsuit in federal district court against Iowa Banking Superintendent Holmes Foster on April 12, calling Iowa's ban on ATM surcharges unconstitutional and seeking to have it lifted.
Foster told the Des Moines Register that he hadn't yet reviewed the suit but is "not unhappy" that it was filed. "I think this will clarify whether federal law prevails or state law prevails in the situation, and everybody will know better than we do now where we stand."
Combined, the five banks operate about 420 ATMs in Iowa. They claim that federal law and regulations pre-empt Iowa law for national banks, and they ask for temporary and permanent injunctions to stop the state from enforcing the surcharge ban.
Iowa is the only state that doesn't allow ATM owners to charge non-customers a convenience fee at their machines.
Parts of Iowa's electronic funds transfer law have been successfully challenged before. The 8th Circuit Court of Appeals in 1999 struck down three provisions of Iowa law in response to a challenge by Chicago-based Bank One. The court ruled Bank One could operate an ATM in the state even though it lacked an Iowa branch.
The court also struck down a provision on ATM advertising and a requirement that banks file an application or informational statement with Iowa banking officials. Bank One has not opened an ATM in Iowa since the ruling.
The Iowa Bankers Association has a task force reviewing ATM pricing with the knowledge that the law could be challenged on the heels of the Bank One case. The task force is working toward forming an industry position on the issue.
"We have and will continue to push for parity between state and national banks when it comes to bank powers and pricing decisions," John Sorensen, the association's president, told the Des Moines Register.
