NEWS RELEASE

EMBARGOED FOR RELEASE:
29 March 2001

CONTACT:
Liz Hitchcock or Ed Mierzwinski 202-546-9707

Survey On Fifth Anniversary Of ATM Surcharging Finds Surcharges Have Nearly Tripled Cost Of Using ATMS

Big Banks Lead Way in Imposing New ATM Card Annual Rental Fee

Five years after ATM owners began imposing ATM surcharges on non-customers, a new national survey finds that the cost of using another bank's ATM machine has nearly tripled, from $1.01 before surcharging to $2.86 today.

The new U.S. Public Interest Research Group survey finds that while in 1996 consumers paid only a single "foreign" ATM fee to their own bank, averaging $1.01, to use another bank's ATM, they now pay both that foreign fee plus the new surcharge that, combined, average $2.86 in 2001. The survey also found that the nation's biggest banks charge the highest combined ATM transaction fees and are leading the way in charging a new annual ATM card "rental" fee.

"Double-dipping ATM surcharges now mean triple costs for consumers, " said Ed Mierzwinski, consumer program director for U.S. PIRG. "Charging consumers twice to use the ATM only once is worse than an April Fool's joke, it's part of a calculated bank strategy to boost profits: Raise fees, invent new fees, and make it harder for consumers to avoid fees."
On April 1, 1996, the two largest ATM networks, VISA's Plus and Mastercard's Cirrus, ended their prohibition against member banks surcharging non-customers using their ATMs. The ATM owner keeps the entire surcharge and receives a portion of the "foreign" ATM fee nearly all banks had previously and continue to charge their own accountholders who use other owner's ATMs.

"In addition to charging the biggest ATM surcharges and the biggest foreign fees, big banks are leading the way in charging a new annual ATM card rental fee, too," added Mierzwinski. "We will continue to support efforts by states and cities to ban ATM surcharges, so that consumers can get some relief from these unfair fees."

The report is the fifth state PIRG surcharge survey since April 1996. It compares ATM surcharges and other ATM fees at 376 banks and credit unions in 25 states and the District of Columbia. Among the key findings of "Double ATM Fees, Triple Trouble" are the following:

• Nationally, 94% of all banks surveyed imposed surcharges averaging $1.47. Average foreign fees were $1.39.
  
  
• Nationally, big banks had higher ATM fees in 2001 than locally-owned smaller banks and more big banks surcharged. Combined big bank ATM fees averaged $3.07. Nationally, 97% of big banks charged surcharges averaging $1.55. Big bank foreign fees averaged $1.52.
  

The report also documented that some banks are now charging consumers an annual ATM card fee. Eighteen percent of all banks imposed annual card rental fees averaging $13.76 on either ATM card or ATM debit card holders or both. Twice as many big banks (24%) as small banks (12%) imposed the annual card rental fee. "Charging us twice to use the ATM only once isn't enough," added Mierzwinski, "Now the banks want to rent us our ATM cards as well."

Despite the increase in the number of ATMs surcharging, some positive signs exist. Several cities, led by San Francisco and Santa Monica, have banned ATM surcharging, although those bans have been blocked pending an ongoing appeal. Iowa continues to enforce its ban on surcharging. Other cities, including New York and Chicago, are considering bans, but until the California appeal has been decided, the banks' lawsuits will continue to have a chilling effect on surcharge ban efforts, Mierzwinski noted.

In addition, several networks and alliances of small banks and credit unions, notably the New England SUM Program, are aggressively marketing their own "no-surcharge" and "selective surcharge" policies. The New England based SUM alliance of several hundred community banks with over 1700 ATMs now has members in New York, Ohio and Puerto Rico. Similar alliances include the Pennsylvania Freedom Alliance and the Louisiana area Community Cash Network. Members of these alliances do not surcharge each others' customers, but do surcharge big bank accountholders using their machines. Until the U.S. Department of Justice intervened in 1999, development of these selective surcharge networks had been blocked by unfair membership rules of ATM networks, Mierzwinski noted.

"Despite the recent growth of the No-Surcharge and Selective Surcharge Alliances, U.S. PIRG will continue to support local and statewide efforts to ban ATM surcharges," added Mierzwinski. "Surcharges are unfair and lead to the growth of bigger banks, which even the Federal Reserve has documented charge the highest fees." He noted that California PIRG had led efforts to ban surcharges in Santa Monica and San Francisco and is actively supporting the cities' appeal to the U.S. 9th Circuit Court of Appeals, which will be decided later this year.

Mierzwinski also released copies of a comment letter U.S. PIRG is sending to the Office of the Comptroller of the Currency (OCC) in response to a proposed regulation change designed to undercut the California cities' appeal. "The OCC has a long history of preempting state low-cost lifeline banking laws and ATM surcharge bans, even when Congress tells it not to do so," Mierzwinski said. "This rule change proposal is nothing more than an unjustifiable litigation ploy in defiance of Congress that's part of OCC's ongoing efforts to help big banks ignore strong state consumer protection laws."

"We urge consumers to avoid surcharging, fee-gouging ATMs," Mierzwinski said. " Use your own ATM when possible, otherwise use ATMs with "No Surcharge Alliance" signs. Shop around when choosing a bank. Join member-owned credit unions or open accounts at small banks. Small banks and credit unions consistently charge consumers lower rates on most fees and accounts than big banks. We urge Congress to enact strong laws requiring banks to offer low-cost accounts and banning surcharges and other unfair bank fees," he concluded.