ATM SURCHARGES AND ATMs OWNED BY INDEPENDENT SERVICE OPERATORS (ISOs)

Prior to 1996, non-bank ATM owners (Independent Service Operators - ISOs) were rare. Since the ban on ATM surcharges was lifted, there appears to have been a rapid growth in the number of ISOs. It is difficult to determine exactly how many ISOs exist. For instance, it is not even known whether or not a central registry exists in any government agency for tracking ISO ATMs and their locations (6). The New York City Council was unable to locate a registry of ISOs in New York City (7).

The survey included in this report includes ATMs owned by banks and does not include ATMs owned by ISOs. In past years, surveyors identified ATMs owned by ISOs located in grocery stores, drug stores, convenience stores, super stores, train stations, restaurants, bars, check cashing establishments, etc. Some of the surcharging ISOs identified in our previous surveys were owned by the establishments where they were located. Others that assessed a surcharge on consumers included American Express, Automated Technology Machines and National Bank Equipment.

A very dangerous trend is that of banks deploying private label machines that appear to be ISOs. These ISO ATMs allow banks to surcharge through ATMs they indirectly own, so they can surcharge their own customers. For years, Bank One has deployed private label machines known as "Rapid-Cash" ATMs, which impose surcharges on Bank One as well as non-customers. In Canada, the consumer group Democracy Watch is fighting the Canadian Imperial Bank of Commerce, which has rolled out 180 similarly unbranded or "white-label" "Ready Cash" machines (8). Bank of America maintains unbranded machines in casinos that surcharge its own customers (9).

Moreover, our past surveys showed that ATMs owned by ISOs assessed higher surcharge fees than ATMs owned by banks (10). This is particularly disturbing in New York City's predominantly non-white, low-income neighborhoods where bank-owned ATMs and full-service bank branches are scarcer than in higher-income, predominantly white New York City neighborhoods (11). While ISO ATMs offer residents of under-banked communities access to their money, they often do so with excessive fees attached.

THE BATTLE TO BAN THE ATM SURCHARGE

Since surcharges were instituted in 1996, proposals to ban or limit fees have been introduced in Congress, state legislatures (including the New York State Legislature), city councils (including the New York City Council) and as referenda.

An attempt at a national ban, sponsored by Senators Alphonse D'Amato (R-New York) and Carol Mosley Braun (D-Illinois), was defeated in the Senate by a 3 to 1 margin. There is very big money riding against a federal ATM surcharge ban. Those opposing a surcharge ban ranged from giant financial interests like banks and credit card companies to machine producers. They include Diebold, MasterCard International, VISA USA, Bank One and Wells Fargo (12).

Surcharge opponents have had more success on a local level. Several state legislatures and city councils have passed surcharge bans and, on November 4, 1999, San Francisco voters approved Proposition F, an ATM surcharge ban. However, at present, there are no state or local ATM surcharge bans in effect. The banks have opposed the surcharge bans in court and consumer advocates await the decision of the 9th Circuit Court of Appeals. The legal battle centers around the rights of state and local governments to regulate national banks.