STRATEGIC PARTNERS
In San Francisco, voters on Nov. 2 will get a crack at banning surcharges at bank owned ATMs. Bankers say that even if the proposal passes, they'll have their day in court.by Ann All, editor
November 2, 1999
Not since the days of D'Amato has there been such a strong push to ban ATM surcharges. The eyes of the ATM industry are turned toward San Francisco, where on Nov. 2 a proposal to ban surcharges at bank-owned machines goes before that city's voters. California Bankers Association spokesperson John Stafford acknowledged that the initiative, called Proposition F, will likely pass. "Who would vote against a free lunch?" he asked. "We expect this to be close, but we don't expect to be favorably surprised." California has become the epicenter of the anti-surcharge movement. Following the recent passage of an ordinance banning surcharges in Santa Monica, several other cities, including Los Angeles and San Diego, are drafting proposals of their own. The Santa Monica ban is slated to take effect on Nov. 12. The California Public Interest Research Group has championed the cause throughout the state. Jon Golinger, CalPIRG's consumer program director, said, "We think it's not surprising that there's a lot of pent-up desire to do something about the ATM surcharge problem. What we do think is surprising is how quickly it's coming together." Golinger said the San Francisco Board of Supervisors incurred the wrath of that city's residents when it unceremoniously tabled an anti-surcharge proposal without debate last February. After that hearing aired on a local cable access channel, Golinger said San Franciscans began clamoring for a petition to get the issue on the ballot. "It's the first campaign I've been involved in where I actually had people seek me out," he said. Banks may have underestimated consumer opposition to the convenience fees, Golinger added. "(Paying the fees) is a daily experience for many people, and it's something that's just never seemed right." Pointing out that "banks have done a very good job politically" of fighting past anti surcharge proposals, Golinger said he senses a shift in momentum. "In a big money versus grassroots battle, big money usually wins. The only time it loses is when critical mass is built up for support. Once that happens, it's hard to stop." Yet the banking industry is confident that it will ultimately prevail. Recent court decisions in Connecticut and Iowa have said, in essence, that the Office of the Comptroller of the Currency's regulatory authority over federally-chartered banks preempts that of state or local governments. Wells Fargo, Bank of America and Union Bank -- all federally chartered -- own a whopping 80 percent of the ATMs in San Francisco. Iowa's decision is currently being appealed in the Eighth Circuit Court of Appeals, while Connecticut's legal battle is back in state Supreme Court. Both of those states based their surcharge bans on interpretations of existing state laws. The San Francisco Chronicle editorialized: "At a minimum, passage of this measure would mean that precious city resources would be spent on a longshot attempt to defend it in court. Most likely, the ultimate result would be that only the smaller banks and credit unions would be forced to allow non-customers to use their ATMs for free." According to Stafford, the California Bankers are awaiting the outcome of Tuesday's vote before taking any legal action. Mentioning the Santa Monica ordinance, he said, "We would like to address these situations collectively." He added, "We're expecting the courts to rule in our favor. However, we're concerned it could be tied up in federal court for months, if not years." Golinger said he hopes the anti-surcharge efforts of California municipalities will create renewed interest in the issue. "We think it may shift the political plates under some state legislators, at least in California."
