November 3 ,1999
SPENCER MICHELS: Consumer groups joined forces with San Francisco politicians to push for Proposition F, the anti-surcharge initiative. The new law makes it illegal for financial institutions like banks to impose a fee on people who use automated teller machines, or ATM's, when those people do not have accounts at that bank. The measure passed with 62 percent of the vote, despite a nearly $500,000 campaign against it led by banks. San Francisco became the first jurisdiction in the nation to vote in a surcharge ban. Both sides agreed the initiative played into a general anger at financial institutions.
KRISTEN PERRY: Every time you go to use a bank, even though you already pay monthly fees and everything, they're always charging for any... even if you go into the bank, or use the ATM's outside the bank or walk inside, there's always a fee.
ANDREW McHALE: Even though it's an automatic transaction, isn't it? So why would they charge you $3.50? They're not doing any work for the money.
SPENCER MICHELS: San Francisco City Supervisor Tom Ammiano latched onto that frustration by sponsoring the initiative after the other supervisors decided to table a similar bill last February when faced with opposition from Mayor Willie Brown and the banks.
TOM AMMIANO, San Francisco Supervisor: San Franciscans as consumers are very concerned about price gouging and we have heard from many constituents about the double-dipping that occurs with ATM usage.
SPENCER MICHELS: Double-dipping, says Ammiano, is when a customer is charged by two banks, his own and the one where he's using the ATM, for a simple cash withdrawal.
SPENCER MICHELS: Why shouldn't a bank be able to charge what it wants for a service that it provides? Nobody has to use it.
TOM AMMIANO: They do charge. The first $1.50 Amply rewards the bank financially with enough money to make a profit and provide the service, but the double-dipping is all gravy. Low-income people make a small withdrawal of 20 bucks, they're paying $3.50 to $4 for that $20 withdrawal. And, you know, to me, that's usury. That's not just a service charge.
SPENCER MICHELS: When a customer uses his own bank's ATM, he is usually not charged a fee. But in the last three years, fees for other users have become almost universal. At the same time, automated tellers have become increasingly popular, with 11 billion transactions last year on the 227,000 machines in the U.S; more than half those machines are not on bank premises. Many are owned independently and are placed in convenient locations like stores. The fees these independently owned machines charge are not affected by the San Francisco ordinance. It is the fees banks and savings and loans charge that are the sole target of the new law. And the banks say that's unfair, since they're the ones who pioneered the ATM'S. John Stafford is spokesman for the California Bankers Association.
JOHN STAFFORD, California Bankers Association: We're providing convenience unprecedented in our history through this. I mean, if you think what banking was like just 20 years ago, how relatively difficult it was go get cash, this is like... almost like money growing on trees. And people ought to be willing to pay a little bit in order to have that convenience afforded to them. And why would anybody expect to use a bank not their own, where they have no relationship or account, why would they expect to use that bank's machines without paying a fee?
SPENCER MICHELS: But John Golinger of the California Public Interest Research Group says the banks can and should afford it.
JOHN GOLINGER, Public Interest Research Group: Banks have always owned ATM's and put them out because they saved them money. It's particularly egregious that a bank would charge so much just to give you back your money, when actually ATM's are saving themselves money.
DEBRA SAUNDERS, San Francisco Chronicle: You know what this measure ought to be called? "Stop me before I go to the nearest ATM"
SPENCER MICHELS: Debra Saunders is a conservative columnist for the "San Francisco Chronicle," who has written derisively about the public vote on ATM Surcharges.
DEBRA SAUNDERS: It's insane. If you read the ballot measure, it actually says that this is a general welfare issue. Now, I don't see going to the most convenient ATM as a general welfare issue. During a very cold winter you might decide that you have to do something to make heating fuel affordable for people. But you don't have to go to the nearest ATM. What did people do before there were 800 ATM's in San Francisco? How did they go to the bank?
SPENCER MICHELS: Still, San Franciscans voted for the surcharge ban, as did the city council in Santa Monica, California, that, despite the banks' well- publicized contention that these local laws are preempted by federal law, which gives regulatory power over federally chartered banks of the comptroller of the currency.
JOHN STAFFORD: We firmly believe this ordinance and the one in Santa Monica are illegal and they will be overturned in court. We do intend to take legal action to see that they are overturned.
SPENCER MICHELS: Today the banks filed suit in federal court to delay implementation of the law. If it is upheld, the bankers predict big changes.
JOHN STAFFORD: It might be that the banks would simply turn over ownership
to a non-bank subsidiary, so they'd be in the same position as all those
non-bank financial companies, and thereby exempted -- or, just as likely,
would be that they could simply pull their machines out of the networks
that connect to all the banks and ATM's and say,
SPENCER MICHELS: Several states and the U.S. military have considered bans on ATM surcharges, but only two states, Connecticut and Iowa, currently prohibit such fees. Court decisions in those states have not definitively clarified the issues raised by San Francisco's new ordinance.