STRATEGIC PARTNERS
The Connecticut Department of Banking is alerting ISOs to a statute that says only in-state financial institutions can deploy ATMs. That may change, however, if a bill introduced by state Banking Commissioner John Burke finds favor in the legislature.by Ann All, editor
May 14, 2000
Surcharging is now allowed in Connecticut, following a December state Supreme Court decision that overturned state Banking Commissioner John Burke's interpretation of a 1975 law banning service charges by banks. Independent deployment of ATMs, however, is another story. "Only a bank or a credit union with a deposit-taking presence in Connecticut can establish an ATM," said state Department of Banking spokesman Dave Tedeschi. Tedeschi believes some ISOs may have misinterpreted the December ruling as a broad go-ahead for independents to deploy machines. But the ruling did not address a section of the Connecticut General Statutes -- Section 36a-155 to be exact -- that forbids independent "establishment" of machines. In the past week, Tedeschi said, the department has mailed 65 letters to merchants alerting them to the fact that they may have an illegal machine in their business. The letter, signed by Burke and Assistant Division Director Glenn Hayes, reads, in part: "You may have been told that it was legal to place such a device in your establishment. However, it appears you are in violation of the law." The department has also contacted several ISOs and processors to ask for their cooperation in deactivating illegally installed machines. To date, Tedeschi said, the department has not learned of any independents that have the required legal relationship with an in-state financial institution. According to Tedeschi, violation of the statute could result in a cease and desist order and $7,500 fine. Burke wants to open the market to more competition. In February he introduced a proposal, S.B. 11, that would overturn the statute and explicitly allow both out-of-state financial institutions and independents to deploy ATMs in Connecticut. If his bill passes, Burke believes the number of ATMs will increase and market pressure will help keep surcharges from rising. "In allowing these entities into the ATM marketplace, the Connecticut consumer will have additional choices and the increased competition will establish the reasonableness of the fee structure," Burke said. Government regulation of ATM fees would not go away entirely under Burke's bill, however. Earlier this month an amendment that would cap any convenience fees at $1.50 was added. A Hartford (Conn.) Courant report indicated that such a cap might not survive a final version of the bill. Burke's bill faces competition from H.B. 5054, a proposal that seeks to eliminate ATM surcharges. Both bills will be heard by Connecticut's General Assembly before its session ends on May 3. Tedeschi said a hearing could occur as soon as March 29 .
