STRATEGIC PARTNERS
Forget New York and Chicago. The latest place poised to take a vote on banning ATM surcharges is Woodbridge Township, N.J.by Ann All, editor
August 23, 2000
Woodbridge Township, N.J., with an area of 27 square miles and a population of just over 93,000, is a small place trying to make a big statement about ATM surcharges. On Feb. 15 the Township Council will vote on a proposal introduced by Mayor James McGreevey that would ban surcharges at all ATMs in the township owned by financial institutions. Those who do not comply would face a fine of $1,000 a day. If approved by the nine-member Council, the ordinance would take effect in 20 days. In a Jan. 31 statement introducing the proposed ordinance, McGreevey opined that "federal and state laws do not adequately address the unfairness of such surcharges to banking consumers." He added, "In the absence of federal and state regulation, it is incumbent upon municipalities to step forward and halt excessive profiteering at the expense of consumers." Like the California cities of Santa Monica and San Francisco, where similar ordinances passed late last year, McGreevey cites the Electronic Funds Transfer Act. The California Bankers Association, in a lawsuit against the two cities, argues that federally-chartered banks are exempt from such ordinances because the Office of the Comptroller of the Currency is their sole regulatory authority. In November, a federal judge issued a temporary injunction allowing the California banks to continue collecting the fees, although they must be put into an escrow account and would be returned to ATM users if Santa Monica and San Francisco win in court. McGreevey, a Democrat who is expected to run for governor in 2001, also said that surcharges are anti-competitive. "Large financial institutions with more ATMs are able to impose higher costs on account holders of small institutions who, in many cases, have little choice but to use the ATMs of the large institutions," he said. "Account holders who wish to avoid these surcharges are pressured to deflect from small institutions to large institutions." John Mulkerin, president and CEO of Woodbridge-based First Savings Bank, said that McGreevey's stance "indicates a lack of understanding of the operations and economics of automated banking services." While non-customers are charged $1 to use his bank's six machines in the township, Mulkerin said the bank still loses money on its ATM program. "Besides the interchange fees that accompany every transaction, there are hardware, software, operational and administrative costs in providing ATM services," Mulkerin said. "Why should we have to give this service away to non-customers? What other business in town, through legislative enactment, has to give away its services for free?" Noting that Bank of America and Wells Fargo barred non-customers from using their ATMs in Santa Monica and threatened to do so in San Francisco, Mulkerin predicted that the same thing could happen in Woodbridge if McGreevey's proposal passes. A bill introduced in New Jersey's state Assembly in 1997, called the Ethical ATM Act, has gone nowhere in the Legislature despite repeated attempts.
