ATM Fees ‘Ripping Off ‘ Customers, Group Says

The rush by U.S. banks to charge consumers new fees for the use of automated teller machines is adding fuel to legislative efforts to ban the fees, a consumer rights group reported Tuesday.

Sen. Alfonse M. D’Amato (R-N.Y.), chairman of the Senate Banking Committee, said he’ll renew his push to ban extra charges for consumers who use cash machines not owned by their banks.

During the last six months, the percentage of ATM machines that charge the new fees has almost doubled, according to the U.S. Public Interest Research Group, a consumer advocacy group.

“Banks aren’t earning money the old-fashioned way; instead, they are ripping off the consumer,” said Ed Mierzwinski of PIRG.

At the same time, the average cost of the surcharges is up, and big banks are inclined to charge more for the service than small banks, PIRG said in its report released Tuesday, which was the first anniversary of the decision by the nation’s two largest ATM networks--Plus and Cirrus--to allow machine owners to charge a second fee.

Wells Fargo, Bank of America, Great Western and Home Savings of America are among the U.S. banks that now levy the surcharge.

John Hall, a spokesman for the American Bankers Assn., said his group believed “the marketplace should decide prices for ATMs, not the government.”

Hall said the rapid growth in machines over the last year--a record 33,400 new ATMs were installed in 1996--was made possible by the surcharges, which go toward paying rent, security costs and other expenses for the machines.

He said most banks offer unlimited free ATM use for their customers using the bank’s machines.

The survey by PIRG covered 860 ATMs in 27 states and the District of Columbia, out of a total 140,000 nationwide. It found that 45% of those surveyed charged consumers for using another bank’s machine in March, nearly double the 23% recorded by the group in a survey in September.

The most common fee was $1, followed by $1.50. They ranged from 25 cents to $2.50.

The new survey also found that 52% of ATMs owned by the nation’s 100 largest banks levied surcharges averaging $1.24, while 39% of smaller banks charged fees averaging $1.06. Only 6% of member-owned credit unions imposed fees, which averaged 67 cents, the group said.

Some states are taking matters into their own hands. Connecticut and Iowa have outlawed the fees, and legislation to ban the surcharges or impose a moratorium is being considered in California and at least 10 other states.

In February, a group of small California banks and thrifts banded together to fight ATM fees charged by bigger rivals, promising free use of their machines for non-customers. The group’s machines carry a special logo: the word “$urcharge” enclosed in a barred red circle.

The PIRG survey also found that despite rules requiring clear notices of surcharges to be posted on ATMs, 12% of the affected bank-owned machines had no signs. An additional 3% had unclear, hard-to-read or tiny signs.

D’Amato plans to reintroduce legislation and hold hearings later this year that would ban the second layer of fees. He unsuccessfully pushed a similar bill last year.

Reps. Charles E. Schumer (D-N.Y.) and Marge Roukema (R-N.J.), members of the House Banking Committee, have proposed a measure to require disclosure of all ATM charges on the terminal screen before a consumer makes a transaction.

Schumer said Tuesday that such a disclosure bill had a good chance of congressional approval but that it was unrealistic to expect a surcharge ban to pass.