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FSPA seeks preliminary injunction against Diebold

The Financial & Security Products Association's lawsuit against Diebold is growing increasingly contentious. FSPA, which represents third-party service and maintenance companies, is seeking a preliminary injunction.

March 16, 2005

Weeks of discussions between Dieboldand the Financial & Security Products Association have yet to resolve an increasingly contentious debate over ATM service that led the FSPA to file a lawsuit against Diebold in October.

At issue are policies that FSPA said prevent its members and other third-party service providers from obtaining parts, documentation or diagnostic software tools needed to provide second-line ATM service.

FSPA, which represents third-party service and maintenance companies, recently escalated its lawsuit against Diebold by seeking a preliminary injunction.

FSPA Executive Director John Vrabec said the injunction request is an attempt to get a quick hearing on the issue in U.S. District Court in San Francisco, where the suit was filed, and to avoid possible lengthy delays.

"The wheels of justice can turn slowly," he said, noting that FSPA has already lost time with negotiations that have not resulted in Diebold ending business practices the association contends are anti-competitive.

Clarification or confusion? 

Not only that, Vrabec said, but Diebold is putting out information that "appears to be a tactic to confuse Diebold customers and the courts."

Vrabec said he believes Diebold is trying to capitalize on customers' confusion during a time when many are still in the midst of upgrading their ATMs to meet Triple DES requirements.

Dave Bucci, Diebold's senior vice president of Customer Solutions, said the manufacturer is simply trying to comply with ISO and Visa requirements for tracking EPPs installed in ATMs as part of Triple DES upgrades.

Bucci said Diebold will sell parts to third-party providers if "they can provide us with a good process to ensure proper tracking of those units, per ISO and Visa requirements." He added, "We want to provide our customers with their choice of service providers, but also protect ourselves by ensuring that proper tracking procedures are in place."

In a statement released on March 7, Diebold said it makes available to its customers and alternate service providers the abilities to buy Diebold parts directly from Diebold and to obtain upgrades directly from the manufacturer that are required by government or the industry.

"There has been some recent confusion in the marketplace about our policies toward alternate service providers for our Opteva and legacy ATMs," said Bucci in the statement. "We work hard at listening and understanding our customers' needs, and our approach allows Diebold customers the flexibility to make ATM service choices that best fit those needs. Our approach benefits customers and strengthens our core business."

But FSPA member Kevin McLaughlin, president of Advent Associates, a Maryland-based ATM sales and service company, said that several FSPA members were unable to order parts for Opteva ATMs on March 8.

"I do not believe (Diebold) can provide us with a single example of a third-party service provider that has purchased an Opteva part," McLaughlin said. "Our members who tried to do so were told that Diebold's policy was to not sell Opteva parts to anyone other than end users."

After lengthy negotiations with Diebold, Georgia-based refurb shop Atlanta Computer Group was awarded the right to purchase Triple DES compliant-EPPs directly from the manufacturer, said Woody Alderman, the company's president. ACG then installed the EPPs in refurbished machines and instructed its customers to buy the software from Diebold.

Late last year, "Diebold cut us off completely," Alderman said. "They have not allowed us to buy any EPPs from them since then."

According to a policy statement posted on the manufacturer's Web site, Diebold sells certain upgrades "on an installed only basis."

In its statement, Diebold also said customers and alternative service providers can license the rights to use its field service technical manuals to assist with ATM maintenance, obtain access to basic diagnostic software that allows the testing and evaluation of specific ATM components, and license the right to use certain Diebold service-related patents.

Diagnostic dilemma

According to McLaughlin, diagnostic tools for the Opteva, Diebold's newest ATM line, are protected by passwords -- which are not made available to third-party service providers.

"We can't run complete tests," he said, because the tools do not allow techs without passwords to instruct peripherals such as card readers to perform involved tasks such as printing receipts. Techs without passwords face similar problems on older machines that have been upgraded to meet Triple DES requirements, he said.

"By shutting out second-line service, Diebold is eliminating the ability for our members to market themselves as single-source providers," Vrabec said.

On its Web site, Diebold notes that basic diagnostics are currently available for Opteva. According to the site, "additional diagnostic tools for Opteva ATMs are presently being created for use by customers and third-party servicers."

The new tools will be offered under license at no charge and should be available by March 21, according to the site. Diebold expects to establish a process for obtaining advanced diagnostics for other ATM models by April 4.

Alderman said he wonders why different diagnostics need to be developed for users other than Diebold technicians. "If they're going to have one product for Diebold technicians and another one for everyone else, that implies to me that the latter product may not be as good."

Bucci said the new tools will ensure that service providers enjoy a consistent level of diagnostics on all of Diebold's ATM models. "(Providers) will have the same diagnostics available on the Opteva as they have had on our OS/2 machines," he said.

"The proof is in the pudding," Alderman said. "(Diebold) can talk all they want, but we won't know for sure until we try to order parts."

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