[Congressional Record Volume 143, Number 81 (Wednesday, June 11, 1997)]
[Senate]
[Pages S5530-S5533]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

           By Mr. D'AMATO (for himself, Mr. Kerry, Mrs. Boxer, Mr. 
             Bryan, Ms. Moseley-Braun, Mrs. Murray, and Mr. 
             Chafee):
  S. 885. A bill to amend the Electronic Fund Transfer Act to limit 
fees charged by financial institutions for

[[Page S5531]]

the use of automatic teller machines, and for other purposes; to the 
Committee on Banking, Housing, and Urban Affairs.


                  the fair atm fees for consumers act

  Mr. D'AMATO. Mr. President, I rise today with Senator Kerry as my 
primary cosponsor to reintroduce legislation to protect consumers from 
excessive and redundant fees imposed by automated teller machine [ATM] 
operators. I am also pleased that Senators Boxer, Bryan, Moseley-Braun, 
Murray, and Chafee have chosen to join with me once again in 
cosponsoring this important initiative.
  Mr. President, last year, I introduced legislation to eliminate ATM 
fees. At that time, some of my colleagues argued that consumers could 
always choose to go to an ATM that does not double-charge. I predicted 
then that if we permit this practice, eventually every bank will 
double-charge consumers would have no choice but to pay through the 
nose.
  Last fall, I asked the General Accounting Office to examine ATM fees. 
I want to know how many banks are double charging and how much 
consumers are being forced to pay.
  This morning the Banking Committee heard GAO's results. Their results 
detail the spread of the anticonsumer, anticompetitive, and anti-free-
market practice--double ATM fees.
  In a nutshell, this abusive practice is spreading like wildfire and 
consumers across the country are getting burned. When I received the 
GAO report, I was shocked to find that, in just over a year, the number 
of ATM's that double charge consumers has risen 320 percent since the 
end of 1995. That means that consumers have less and less of a choice 
when they need to use an ATM.
  The GAO study also reveals that 54 percent of the ATM's in the United 
States are now double-charging. Soon consumers will have nowhere to 
turn. For that reason, I am reintroducing my bill, the Fair ATM Fees 
for Consumers Act.
  Until April of last year, most consumers paid a fee, usually about 
$1, to their own bank each time they used another bank's ATM. This fee 
was intended to cover the cost of the transaction. Now, in addition to 
that fee, the ATM operator may charge these consumers a second fee. 
This second fee can run as high as $3 per transaction. Many consumers 
are forced to pay a total of $3 or more just to take $20 of their own 
money out of the bank. That's outrageous.
  Double-charging was prohibited in most of the country until April 1, 
1996, when Visa and MasterCard, which operate the two largest ATM 
networks, endorsed this practice. When the Banking Committee held a 
hearing on double ATM charges last summer Visa and MasterCard refused 
to appear. I intend to hold further hearings on this issue and I fully 
expect Visa and MasterCard to testify as to why they suddenly permitted 
this double charge which hurts consumers and community banks.
  Recent estimates show that the average consumer is paying a whopping 
$155 per year to use automated teller machines or ATM's. The average 
family will pay several times that amount. That's outrageous. The banks 
are making windfall profits from working people.
  A transaction conducted at an ATM costs about 25 cents while the same 
transaction conducted by a teller in a bank branch costs well over a 
dollar. Realizing this, banks strongly encouraged their customers to 
use ATM's. ATM's appeared everywhere as banks cut bank on branches and 
teller service. ATM networks were formed when individual banks joined 
together and agreed to let each other's customers use any ATM in the 
network without paying any extra charges.
  Now, banks are suddenly claiming that ATM's are no longer cost 
effective. They have decided to soak consumers with multiple fees every 
time they need to take money out of their accounts.
  Banks report record profits in part by slapping customers and 
noncustomers with ever-increasing convenience fees. In many cases, 
consumers are forced to pay multiple fees for a single ATM transaction. 
Imagine, working men and women are paying two separate fees for the 
privilege of getting their own money.
  This is a windfall for the banks. The consumer receives no additional 
benefit and the bank provides no additional service. A recent study by 
the U.S. Public Interest Research Group [U.S. PIRG] reported that banks 
will profit $1.9 billion from ATM surcharges alone this year. This 
double charge is a free lunch for the banks and consumers are footing 
the bill. I am not opposed to banks making a profit, but double ATM 
fees unfairly exploit the consumer.
  Banks argue that consumers have the freedom to go to an ATM that 
doesn't double-charge. But working people on their lunch hours, or late 
at night, have no time to hunt for a free ATM when they need cash. As 
the GAO reported, those free ATM's are getting very hard to find.
  The people who are getting hit the hardest are the ones who can least 
afford it. While many Americans can simply choose to avoid extra fees 
by taking $100 or $200 every time they go to an ATM, many families 
struggling to make ends meet don't have that option. Senior citizens on 
fixed incomes and students with little money to space are being forced 
to pay $2 or $3 just to take out $20. A $3 fee on a $200 withdrawal is 
a nuisance, but taking a $3 bite out of a $20 withdrawal is outrageous.
  Mr. President, double-charging is a monopolistic practice that 
eliminates competition and distorts the free market. Banks are using 
double ATM fees to squeeze small competitors out of business. Community 
banks, thrifts, and credit unions have customers who depend on access 
to other institutions' ATM's. These customers now pay twice whenever 
they use an ATM. Large banks with many ATM's are exploiting this 
situation to lure away small bank customers. Eventually, small banks 
will not be able to survive. That's not competition, that's a monopoly.
  When ATM's were first introduced, banks claimed that these machines 
would give consumers more choices and greater convenience. ATM's were 
supposed to reduce costs and the savings could be passed on to 
consumers. Today, when bank profits are at record highs, it is 
astonishing that banks cannot resist the temptation to squeeze 
consumers a little harder by doubling ATM fees,
  I look forward to holding additional hearings on ATM fees during this 
Congress to provide opponents and proponents of the bill, including 
representatives of various States that are attempting to enact bans, an 
opportunity to participate in this debate. I hope may colleagues will 
join me in taking a stand against this predatory banking practice.
  Mr. President, I ask unanimous consent that the full text of the bill 
be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 885

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Fair ATM Fees for Consumers 
     Act''.

     SEC. 2 DEFINITION.

       Section 903 of the Electronic Fund Transfer Act (15 U.S.C. 
     1693a) is amended--
       (1) in paragraph (10), by striking ``and'' at the end;
       (2) in paragraph (11), by striking the period at the end 
     and inserting a semicolon; and
       (3) by adding at the end the following new paragraphs:
       ``(12) the term `electronic terminal surcharge' means a 
     transaction fee assessed by a financial institution that is 
     the owner or operator of the electronic terminal; and
       ``(13) the term `electronic banking network' means a 
     communications system linking financial institutions through 
     electronic terminals.''.

     SEC. 3. CERTAIN FEES PROHIBITED.

       Section 905 of the Electronic Fund Transfer Act (12 U.S.C. 
     1693c) is amended by adding at the end the following new 
     subsection:
       ``(d) Limitation on Fees.--With respect to a transaction 
     conducted at an electronic terminal, an electronic terminal 
     surcharge may not be assessed against a consumer if the 
     transaction--
       ``(1) does not relate to or affect an account held by the 
     consumer with the financial institution that is the owner or 
     operator of the electronic terminal; and
       ``(2) is conducted through a national or regional 
     electronic banking network.''.
                                  ____

  Mr. KERRY. Mr. President, I am pleased to join my colleague, the 
chairman of the Banking Committee, in introducing the Fair ATM Fees for 
Consumers Act of 1997.
  Today, in the Banking Committee, representatives of the U.S. General 
Accounting Office discussed the findings

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of their report on the growth of ATM surcharges. It is a fascinating 
report, and I recommend our colleagues take a look at it. I will 
highlight some of the findings, especially as they pertain to my home 
State.
  I will tell you, Mr. President, it is not often in the Banking 
Committee that passions run this high on a financial services issue. I 
have heard from officials of large banks who tell me that prohibiting 
ATM surcharges is tantamount to nationalizing our banking industry.
  Mr. President, I do not believe that it is the business of the U.S. 
Senate to set prices and fees at banks and other financial 
institutions. I am a great believer in the free market--not the Federal 
Government--dictating fee structures. But there is a general sense of 
fairness that is being violated in this surcharge.
  When a depositor opens an account, he or she knows the fees 
associated with transactions. It is current federal law--found in 
statutes like the Electronic Funds Transfer Act, the Truth-in-Savings 
Act, and the Truth-in-Lending Act--that mandates fees to be disclosed 
to the consumer. So, when we open a bank account, we know how much each 
transaction will cost.
  But now, with this new surcharge, we are left in the dark. In the 
absence of disclosure law dealing with surcharges, we don't find out, 
in many cases, how much it will cost to use an ATM machine not 
associated with our particular bank until our statement appears in the 
mail, long after the ATM transaction is completed.
  That is bad for consumers and it is bad precedent. And, as the GAO 
report testifies, the trend is not favorable. Historic mergers, 
consolidations, and acquisitions have taken place in the financial 
service industry. Bank lobby hours have been curtailed so drastically, 
and so many human tellers replaced by machines, that we are forced to 
use ATM's. This is the undeniable direction of the industry.
  Mr. President, some of the biggest banks argue that ATM fees are an 
outgrowth of the convenience consumers derive from using ATM's. But I 
suspect that other forces are at play. Commercial banks posted record 
profits last year, surpassing the previous record-breaking year. This 
new fee is not needed to ensure that banks are profitable.
  Mr. President, last year, a constituent of mine from Dorchester, MA, 
testified before the Banking Committee on this issue. He owns a 
profitable bank with one ATM machine. He runs the bank well and serves 
the community. But his small bank is no match for far bigger 
competitors. He contends that these surcharges are designed by the big 
banks to draw customers away from community banks. This may not be an 
issue of establishing prices and fees; this has all the coloration of 
an antitrust issue. I want to set the marker down clearly--the Congress 
needs to do a better job in monitoring and preventing the trend of 
consolidation from running the smaller banks out of business.
  In Massachusetts, the two largest banks own more than 62 percent of 
the ATM's in the Commonwealth. The GAO report tells us that, 
nationally, one-third of all ATM's are owned by large banks. So, 
Massachusetts has double the national concentration. And that is a 
critical measure, Mr. President. The GAO report found that ATM 
surcharges are more prevalent among larger banks, 98 percent of which 
own ATM's. Fifty-four percent of large institutions assessed a 
surcharge as opposed to 32 percent of smaller institutions. That is the 
static measure, which is significant enough, but the trend is even more 
disturbing. The number of ATM's assessing a surcharge has risen 320 
percent in the past 13 months. The highest surcharge found was $3 and 
the average surcharge is $1.14, up from 99 cents last year.
  I will say that I appreciate the fact that BankBoston--one of the two 
large banks in Massachusetts--does not impose surcharges at all. I also 
know that the Massachusetts Bankers Association is grappling with this 
issue, trying to find some accommodation, and I am willing to listen to 
its arguments on this issue. My mind is certainly open to alternatives 
to the current draft of our legislation. But, Mr. President, I must say 
that the findings of the GAO report do little to dissuade me that we 
must move forward to prohibit these surcharges.
  I thank my friend, the chairman of the Banking Committee, for his 
leadership.
  Ms. MOSELEY-BRAUN. Mr. President, I would like to congratulate my 
colleague, the Senator from New York, Senator D'Amato, for his 
leadership on this bill, the Fair ATM Fees for Consumers Act.
  Few Americans will quarrel with the issue this bill addresses: 
surcharging, or double charging consumers for a single ATM transaction, 
is unfair and unnecessary.
  Many banks charge their customers for using foreign ATM's--those 
ATM's not owned by the customer's bank. These fees are disclosed to the 
customer in advance, allowing consumers to shop for and choose banks 
that offer the best package of services at the best price.
  I don't have a problem with that kind of fee. Customers have that 
information well in advance, and at a time they can use it. If the 
services offered by banks fail to meet the customer's satisfaction, 
customers can take their business elsewhere.
  Surcharging, however, undermines all that. Last April, the major 
computer networks allowed ATM owners to begin charging fees to 
customers using foreign ATM's. From that day, the floodgates opened, 
and now customers nationwide are being charged twice for the same 
transaction--first by their own institution, and by the institution 
owning the ATM machine.
  These costs are spreading. According to a recent General Accounting 
Office report commissioned by the Senator from New York, ATM surcharges 
have ballooned 320 percent since 1995.
  One example of the surcharge boom is in my hometown of Chicago. 
Earlier this month, First Chicago NBD instituted surcharges, affecting 
710 ATM's in the area. That decision, coupled with the 1,550 ATM's in 
the region already levying surcharges, now means that more than half of 
the 4,400 ATM's in the Chicago area have a surcharge.
  Mr. President, if current trends continue, few ATM's will remain that 
have no surcharge, and consumers, despite surcharge warnings posted on 
the computer screen or on the machine, will truly have no alternative 
but to be charged twice for the same transaction.
  I am aware that there are some costs to convenience. There are more 
than 122,000 ATM's around the Nation, almost 5 times the number in 
place a decade ago. Americans used ATM machines more than 9 billion 
times last year, accessing their bank accounts and other financial 
services 24 hours a day, 7 days a week. I know there are costs 
associated with deploying these new machines, handling increased 
transactions, and other maintenance and safety issues.
  It should not be forgotten, however, that banks moved customers to 
ATM's because, compared to teller transactions, ATM's were cheaper. 
According to a Mentis Corp. study, an ATM cash withdrawal from an in-
branch ATM costs an average of 22 to 28 cents, while the cost of a 
teller transaction is 90 cents to $1.15. And in some cases, banks 
charge customers for completing transactions with a teller if those 
transactions could have been completed at an ATM.
  Certainly ATM's are a convenience for customers, but the truth is 
that banks have deployed more ATM's because it means lower costs to 
banks.
  I remember when banks paid their customers for the use of their 
money. Today, however, it's increasingly expensive for the average 
working family to manage even a simple banking account. Americans who 
make timely credit card payments, or no payments at all, face higher 
fees. Americans who avoid special banking services are considered 
unprofitable customers, and face higher fees.
  Now, with ATM surcharges, Americans are discovering that they must 
pay banks an additional $155 each year simply to access their own 
money.
  The market is out of whack. The pubic knows this is unfair, and their 
visceral reaction is a response to market excess.
  I am hopeful that the financial industry will take the necessary 
steps to remedy this problem. Otherwise, the Government has a duty to 
correct the abuse of double and triple charging

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people for accessing their own hard-earned dollars.
  It is time to stop nickel and diming the American pocket. That's why 
I'm pleased to be a cosponsor of this bill, and I urge its swift 
approval by the U.S. Senate.
                                 ______