Assembly Committee Rejects Bill to Ban Extra ATM Fees

A bill designed to prohibit banks from charging extra ATM fees to people who are not their customers was defeated Monday at its first state legislative committee hearing.

The author of the measure, Assemblyman Michael Sweeney (D-Hayward), said he would bring the bill back before the Assembly Banking and Finance Committee for another vote at a later date.

But support for the measure on Monday fell far short of the seven votes needed for approval. Only three committee members voted yes, and six voted no, including two Democrats.

Sweeney argued that the state’s two largest banks, Bank of America and Wells Fargo, have been profiting by “double-dipping” on their automated teller machine charges to non-customers. He said other banks have followed their lead.

First, he said, the banks charge a transaction fee among themselves, often passing on the costs to their customers who withdraw cash at other banks’ ATMs, which most supporters of the Sweeney bill say is fair.

But on top of that, in the case of B of A and Wells Fargo, the ATM user who is a not a depositor is charged at least another $1.50 per transaction--and it is that fee that the Sweeney bill seeks to outlaw.

The second charge, Sweeney said, “is not necessary. Banks can fully recover their costs [of servicing non-customers at ATMs] by bank to bank fees.” His bill (AB 46), he said, would “reduce price gouging and predatory marketing.”

Supporters of the measure called the fees a “rip-off to be charged twice to use an ATM only once” and a burden on senior citizens who lack the mobility to move to locations where ATM withdrawals are less expensive.

But Gregory O. Wilhelm of the California Bankers Assn. said the service provided by banks to non-customers is advertised on the ATM screens to alert users to the fee and is an optional convenience.

“You can always go to your own bank and get your own money” without charge, Wilhelm said.

Kevin McGuire, president of the small Palm Desert National Bank, said his bank has placed 75 ATMs in malls and hotels that are maintained through surcharges of $1 to $2.50 per transaction. If the Sweeney bill becomes law, he said, that part of his business will be forced to shut down.

One banker at the hearing, when asked, conceded that transaction fees for nondepositors were not equally applied throughout the ATM system.

Dudley Nigg, executive vice president of Wells Fargo Bank, told reporters that at some “corporate facilities” no fee is charged to ATM users who are not customers.

Among those locations: the bank’s ATM in the basement of the state Capitol. He admitted it was “a stretch” to call that a corporate facility.