Investigation Into ATM Fees Ends

<i> From Bloomberg News</i>

The U.S. Justice Department has quietly dropped an antitrust investigation into the surcharge policies of the nation’s largest networks of automated teller machines.

Antitrust enforcers had examined whether big banks, which dominate large ATM networks, illegally prevented smaller members from forming alliances that wouldn’t impose fees on one another’s customers. Small banks and credit unions use alliances as a tool to keep customers from switching to rivals with wider networks.

The probe might have helped spur changes in the industry. Honor Technologies Inc. and Star System Inc., the two largest networks, combined forces this year and adopted Honor’s policy of letting members form surcharge-free alliances. They joined other networks that already permitted such agreements.

“When the department looked into it, there was a broad reaction by the networks toward allowing some of these kinds of organizations to form,” said Stephen Mahinka, a lawyer for Concord EFS Inc.'s MAC network.


Justice Department spokeswoman Jennifer Rose confirmed that the government closed its investigation earlier this year, although she wouldn’t provide details about the probe. The department revealed the investigation in July 1998.

ATM surcharges have become a target for consumer advocates and legislators. Imposed on non-customers--typically at $1 or $1.50 per transaction--they come on top of charges already imposed by the ATM user’s own banking institution.

Three years after MasterCard International Inc.'s Cirrus and Visa International Inc.'s Plus networks first permitted them, the fees are a significant revenue source for banks. They generate more than $2 billion a year, according to a recent survey by the U.S. Public Interest Research Group. Of the banks surveyed by the consumer group, more than 93% imposed surcharges.

Antitrust enforcers last year sent civil subpoenas to several ATM networks.


At the time, Star barred alliances within its network, saying all its cardholders should get the same treatment at ATMs. Other networks, including Honor and NYCE Corp., were in the process of lifting similar policies, in part because of complaints from some members.

Even though the major networks now permit the alliances--removing the government objections--they haven’t proved as popular as some had expected. Only a “very small group” of banks have taken advantage of Star System’s new policy, said Nikki Waters, the network’s executive vice president.

Banks are also fighting courtroom and legislative battles over the surcharges. In Connecticut, the state’s attempt to ban the fees has sparked a series of legal challenges from Fleet Financial Group Inc. and First Union Corp.

And on a national level, the Clinton administration is pushing for legislation, over the opposition of banking lobbyists, to require prominent disclosure of fees ATMs charge.