STRATEGIC PARTNERS
The idea of local governments banning ATM surcharges took hold in California but is moving eastward. The newest members of this anti surcharge movement: Chicago and New York.by Ann All, editor
March 8, 2000
Despite a federal court injunction barring the enforcement of anti surcharge ordinances in the California cities of San Francisco and Santa Monica, the idea of local governments eliminating ATM surcharges continues to spread. Chicago is the latest municipality to follow the lead of San Francisco and Santa Monica, both of which late last year enacted ordinances banning convenience fees. However, those ordinances were stalled by a federal court injunction. In granting the injunction, U.S. District Judge Vaughn Walker opined that both ordinances likely would be found unconstitutional in court. And in Santa Monica, Bank of America and Wells Fargo prevented non customers from using their ATMs after that city's anti-surcharge ordinance was enacted last November. Nonetheless, Chicago Alderman Joe Moore plans to introduce his proposal to eliminate surcharging at bank-owned ATMs at a Feb. 16 City Council meeting. According to the Chicago Tribune, Moore unveiled his proposal at the same news conference at which two consumer groups attacked Chicago-area banks for raising ATM convenience fees in recent years. Gail Siegel, research director of the Coalition for Consumer Rights, called banks "too profit happy." According to a Coalition for Consumer Rights study, the average surcharge paid by non-customers at 10 selected Chicago-area banks rose to $1.48, an increase of more than 500 percent from three years before. The study also found that all of the city's major banks now collect such fees at their ATMs. Bob Kelly, a spokesman for Chicago-based Bank One, said that financial institutions created their ATM networks for the use of their own customers and that convenience fees are "appropriate." Earlier this month, New York City Council Speaker Peter Vallone introduced a similar proposal to ban surcharges at the city's estimated 2,700 bank-owned ATMs. In a press release, Vallone called the fees "nothing more than extra and unnecessary fines to customers" and "secondary charges covering costs that have already been paid for." According to a City Council report, 87 percent of New York City banks assess ATM convenience fees. Also according to the report, "the vast majority of ATM consumers are unaware that the surcharge they are paying to the ATM owner is in addition to a fee the same ATM owner is collecting from the customer's bank for the transaction." The Council also cites the Electronic Funds Transfer Act in its report, noting that the EFTA "contains express provisions permitting state or local consumer protection measures that afford consumers greater protection than that afforded by federal law." Based on that, the report concludes that the EFTA "explicitly preserves the right of City's (sic) like New York to enact its (sic) own laws protecting ATM consumers from unfair practices."
