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Two NY counties require registration of non-bank ATMs

Depending on one's viewpoint, suburban New York is a stronghold of consumer protection -- or a hotbed of unnecessary government intervention. Two counties, Rockland and Westchester, recently passed legislation requiring registration of non-bank ATMs.

February 20, 2005

Depending on one's viewpoint, suburban New York is a stronghold of consumer protection -- or a hotbed of unnecessary government intervention.

Two municipalities, Rockland County and Westchester County, recently passed legislation that requires registration of non-bank ATMs. Both involve fees to cover administrative and other costs.

In Rockland County, independent ATM operators will be required to register their machines with the county's Department of Consumer Protection and pay an initial one-time $55 registration fee. A charge of $25 will apply to each additional ATM; if machines are moved, a fee of $10 will be required.

The law, passed on Feb. 2, applies to all new and existing ATMs.

After companies register, they will receive a sticker to be posted on the machines. David Fried, sponsor of the legislation, said that such stickers may boost consumer confidence about using non-bank ATMs. They may also provide a means for a business owner to defend himself if an ATM user's card data is compromised at a machine in his store. "In those cases, the business owner is a victim as well," Fried said.

Fried said increased reports of identity theft and of card skimming at ATMs prompted him to introduce the legislation in July. Bank machines were excluded because they are "already heavily regulated by the state Department of Banking and other entities," he said. "We wanted to address the gap in accountability for non-bank ATMs."

Already adequate protection

Doug Falcone, owner of Access to Money, a New Jersey-based registered ISO with some 4,000 machines under contract, including "hundreds" in New York, said that existing EFT network regulations protect the consumer in cases of fraud.

"It's not like vending machines where anybody can buy one and put it on the street. In those cases, it makes sense to register them so you know who to go to if there's a problem," Falcone said. "ATMs are connected to national financial networks, and a sponsor bank assumes responsibility for them -- so there's definitely recourse if there's a problem."

In the case of transaction reversals and similar concerns, Falcone said, "consumers are better protected than ATM companies."

Anthony Guimarra, owner of Citywide ATM, a New York-based independent ATM operator with 35 machines under contract and plans to install more in the coming weeks, agreed with Falcone.

"If there's a problem, the cardholder is going to go to his bank. They're going to go to my processor and sponsor bank, and it's going to get taken care of," Guimarra said. "Involving my company just puts a middleman where there doesn't need to be one."

Guimarra, who has machines in Rockland County, said he has not yet been contacted by the county or informed of specifics of the registration process.

Lessen the financial impact

Though the first draft of the legislation called for an annual fee, Fried said it was amended to lessen the impact on ATM owners. "We wanted to be as respectful as possible to the small business owner, and we realize these ATMs provide a valuable service to the community."

The fees will "not be a money maker for county government," Fried said. Instead, they will be earmarked to cover the costs of maintaining a registry and also used by the county's Computer Crimes unit for victim assistance and public education efforts.

Rockland County's Office of Consumer Protection, district attorney and sheriff will share responsibility for enforcement of the law. After the New York secretary of state signs off on it, ATM owners will have three months to comply.

In Westchester County, a law requiring registration of nonbank ATMs with the county's Department of Consumer Protection went into effect on Feb. 7. ATM owners are now required to pay $75 per machine every two years and post a decal on their ATMs as proof of registration.

Richard Wishnie, vice chairman of Westchester County's Board of Legislators and chairman of its Public Safety Committee, called the legislation "a common-sense way to protect consumers from losing their money through ATM scams. In addition, law enforcement officials have told us it should also deter the use of these machines by those who use them for money laundering purposes."

"If we come across unregistered machines, there will be a potential for penalties," said Paul Gallagher, a senior inspector with the county's Department of Consumer Protection. The law includes provisions for fines of up to $500 for first-time offenders and $1,000 for repeat offenses.

Gallagher said the county's Department of Weights and Measures, which maintains "quite a presence" in retail locations like gas stations inspecting machinery such as fuel pumps, is helping inform local business owners of the new law. "They will be on the lookout for ATMs and will notify owners of the registration requirement."

Unlike Rockland County, registration fees collected in Westchester County will go into the county's general fund, Gallagher said.

Bearing the cost

Citywide ATM's Guimarra called such fees "a way to disguise taxation."

Falcone said that merchant owners of ATMs, and ultimately consumers, will pay a price for such legislation. "I'm going to have to charge my dealers to make up the difference (for these fees). They're going to charge their merchants; the merchants will pass it along, and the consumer could end up paying 10 cents more for his transaction."