STRATEGIC PARTNERS
The surcharge is the villain (again) in a lawsuit filed by a Washington man. Jeremy Knapp, a Bank of America customer, contends he shouldn't have been charged a convenience fee at an unbranded machine owned by BofA.
November 27, 2000
Jeremy Knapp was miffed when he noticed the Bank of America logo on his ATM receipt. After all, Knapp, a BofA customer, had paid a $1.50 surcharge -- on top of a $1.75 foreign fee -- to withdraw money from the generic-looking ATM in his neighborhood grocery store.
When Knapp called the customer service number posted on the machine, he reached a BofA representative, who agreed to refund a month's worth of charges to Knapp. When he returned to the machine and was again charged a fee, Knapp decided to call a lawyer.
Knapp's attorney, Adam Berger of the Seattle law firm Schroeter, Goldmark & Bender, in a suit filed Sept. 21 in U.S. District Court in Seattle, charges that the bank violated the Electronic Funds Transfer Act by surcharging its own customers at unbranded ATMs that it owns and operates at retail sites. The suit also accuses BofA of violating the Washington Consumer Protection Act, which, according to the office of the Washington attorney general, "declares that unfair and deceptive practices in trade or commerce that harm the public interest are illegal."
Noting that BofA filled the ATM with blank receipt paper after the suit was filed, Berger said that wasn't the appropriate response to his client's problem. "They changed the receipts rather than changing the charges, and we don't believe that's the right solution here."
Berger is seeking class-action status for the suit. If the court makes the complaint a class action, all Bank of America customers in the state of Washington who have been surcharged on unbranded machines could qualify for reimbursements. Berger thinks it's likely that "several thousand" would be eligible.
Berger said that compensation is not the major objective of the suit, however. "Our primary goal is to get Bank of America to change this practice, and we also want to raise consumer awareness of the issue."
He is uncertain of how many of the unbranded machines are in Washington but said a local news report indicated that there were 45 of them in the Puget Sound area alone. Bank of America, citing a "no comment" policy regarding pending litigation, declined to reveal a number. The bank owns more than 850 machines in the state.
Just how common is the practice of banks maintaining unbranded machines at off-site locations? It's difficult to say, although industry experts report that banks sometimes choose to deploy them at sites like casinos and racetracks, which may carry a public relations stigma.
Chicago-based Bank One charges its customers at some of the 2,600 off-site machines in its Rapid Cash program. The bank's customers pay a $1 convenience fee, while customers of other banks pay $1.50. The bank does not collect a fee at all Rapid Cash ATMs. According to Copley News Service, Bank One halted the practice at 350 of the machines located in areas that have a limited number of bank branches."urn:schemas-microsoft-com:office:office" />
Another bank that collects a surcharge from customers at some of its ATMs is the Canadian Imperial Bank of Commerce (CIBC). Customers and non-customers alike pay a $1.25 (Canadian) fee at about 200 unbranded machines called Ready Cash, all deployed in retail locations. The machines are operated through a subsidiary called Intria Corp.
Noting that consumers are notified that a fee is being assessed and offered the option of declining the transaction, CIBC spokesman Joe Heim said the machines – called "white labels" in Canada -- provide a way for the bank to offer ATM service at low-volume locations. Collecting a convenience fee is the only "realistic" way to maintain machines at these sites, he said.
Deployment by independents has taken off since Interac, Canada's national ATM network, decided to open the market to non-banks in 1996, Heim said. "If we didn't provide the service, someone else would."
Also, he added, sometimes retailers specifically request "white label" ATMs.
CIBC, which has a network of about 3,800 branded ATMs, distributes materials at branches and on the Internet that warn customers that they "are liable for bank fees at any machine not displaying the CIBC logo," Heim said.
Berger contends that BofA's customer agreement doesn't specifically address the unbranded issue. "It says (customers) aren't going to be charged to use a BofA ATM. We would define that as one owned or operated by BofA, regardless of what sign they choose to hang on the machine," he said.
According to the bank's Web site, account holders are guaranteed free access to cash at ATMs "which display a Bank of America sign."
