Survey Finds On Third Anniversary of ATM Surcharging; DC Metro Area Banks Included
More
than nine out of ten banks charge consumers the controversial ATM
surcharge on top of the fee already charged by almost all banks for
using another bank's ATM-- effectively doubling the cost of an
automatic teller machine (ATM) transaction, according to a national
survey of 336 banks released today by the U.S. Public Interest Research
Group (U.S. PIRG).
"The
surcharge is no April Fool's Joke. Consumers should not be charged
twice to use the ATM only once," said Ed Mierzwinski, Consumer Program
Director for U.S. PIRG. "The double-dipping ATM surcharge is an
outrageous example of fee-gouging by banks," he added. "Banks raise
fees, invent new fees, and make it harder for consumers to avoid fees."
Key findings of the report, "ATMs: Always Taking Money," include:
- In
March 1999, 93% of 336 banks in 23 states and the District of Columbia
surcharged non-account holders. That percentage represents a 31%
increase from a year ago, when a PIRG report found that 71% of banks
surcharged non-customers.
- More
than 97% of banks already charge their customers a "foreign" or
"off-us" fee of $1.20 for using another bank's ATM. Since part of this
"off-us" fee is already used to compensate the ATM owner, the ATM owner
is paid twice for a single transaction when the surcharge is added on
top of the "off-us" fee.
- Surcharging
more than doubles the cost of many ATM transactions. When the average
"off-us" fee ($1.20) is added to the average surcharge ($1.37),
consumers pay $2.57 per ATM transaction at machines not owned by their
own banks.
- In
14 of the 24 states, including DC, Maryland and Virginia, every bank
surveyed imposed surcharges. Average area surcharges were above the
national average of $1.37, with DC and Virginia averaging $1.50 and
Maryland $1.44.
"Banks charge this double dipping surcharge for one reason -- because
they can," added Mierzwinski. "Congress and state legislatures have a
clear choice. They can protect consumers by banning ATM surcharges or
they can let banks keep on picking consumers' pockets."
Additional findings included:
- Based
on survey results, PIRG estimates banks earn more than $2.1 billion
annually in ATM surcharge revenue, on top of income from off-us and
other ATM fees.
- In
1998, banks reported their seventh straight year of record profits --
$62 billion. According to government figures, non-interest income,
including fee income, rose over 18% in 1998, while profits overall
increased 4.7%.
- The
survey found that disclosure of whether a bank imposes ATM surcharges,
as some members of Congress have proposed as an alternative to a
surcharge ban, does not work. Nearly 25% of ATMs surveyed had either no
disclosure or inaccurate disclosures.
ATM
surcharge bans, fee caps or moratorium legislation are now or have been
under consideration by at least 25 legislatures and two city councils
over the past two years. Although no ban has been enacted by a
legislature, two states, Connecticut and Iowa, ban ATM surcharges by
order of the Banking Commissioner. Court challenges by Fleet Bank (CT)
and Bank One (IA) have so far failed to overturn the rules, although
federal bank regulators have now weighed in on behalf of the two
national banks.
Although
increasing numbers of small banks and credit unions are surcharging,
surcharge benefits accrue primarily to big banks, which generally
impose higher fees on their own customers, according to both PIRG and
Federal Reserve studies. "So surcharging isn't about choice between
ATMs that surcharge and those that don't. It is ultimately
anti-competitive, since it takes away choice by leading to fewer,
higher-priced banks," Mierzwinski added.
"State
governments should protect consumers from outrageous fees, especially
since Congress has failed to do so," said Mierzwinski. "We commend U.S.
Rep. Bernie Sanders (I-VT) for proposing to end ATM surcharges, but we
are very disappointed that Chairman Leach (R-IA) opposed, and the House
Banking Committee rejected, the Sanders ATM surcharge ban amendment to
HR 10 last month." HR 10, Financial Modernization legislation, must
still be considered on the House floor, where Sanders is expected to
offer his amendment again.
"Consumers
should avoid surcharging ATMs," concluded Mierzwinski, "and call their
state legislators and members of Congress and urge them to stand up for
consumers and fight the ATM surcharge rip-off."
