Posted on: Saturday, October 26, 2002

Ruling allows banks to charge ATM fees

By Pham-Duy Nguyen
Bloomberg News Service

SAN FRANCISCO — Bank of America Corp., Wells Fargo & Co. and other banks may charge fees for the use of automated teller machines, a federal appeals court said, rejecting attempts by Santa Monica and San Francisco to end the practice.

The 9th U.S. Circuit Court of Appeals upheld a lower court's decision, saying banks are governed by federal, not local, law. The two cities in 1999 passed ordinances prohibiting banks from charging fees to non-customers.

Banks earn more than $2.1 billion in ATM surcharge revenue annually, according to a survey by the U.S. Public Interest Group. Charlotte-based Bank of America, one of the banks that brought the suit against Santa Monica and San Francisco, has the largest network of ATMs in the United States.

"State attempts to control the conduct of national banks are void if they conflict with federal law, frustrate the purposes of the National Bank Act, or impair the efficiency of national banks to discharge their duties," wrote Judge Joseph Sneed on behalf of a three-judge panel.

San Francisco Deputy City Attorney Owen Martikan said the city plans to ask for a review by a larger group of judges on the 9th Circuit.

The case was the first to "squarely" address the issue of ATM fees, said Michael Kass, an attorney who represented the California Bankers Association in the case.

The decision reaffirms the 1864 National Bank Act, which "does control what national banks can do and what fees they can charge," Kass said.

Wells Fargo and Bank of America charge nondepositors $1.50 for withdrawing money, an amount Santa Monica Deputy City Attorney Adam Radinsky said is "pure profit and double dipping."

Santa Monica hasn't considered whether to appeal.