Word: atms
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Consumers have come to believe that automated teller machines should distribute cash. Banks believe that ATMs should collect some too--say, a $1.50 bite out of each cash withdrawal at a bank where you're not a customer. And that's just the first bite, because often when you make such a withdrawal, two banks can get into your wallet. The combined ATM fees can reach $3.50 or more. Such sums have now sparked a nationwide legislative brawl over profitable ATM surcharges...
Consider the turmoil at ATMs in San Francisco and Santa Monica, Calif., which became the first U.S. cities to ban bank ATM surcharges. Megabanks Wells Fargo and Bank of America fired back by closing their ATMs to nondepositors in Santa Monica and threatening to do the same in San Francisco when its law takes effect in December--all of which made cardholders even angrier. A federal judge sided with the banks by blocking the anti-fee laws until a full trial can determine their constitutionality. Says Santa Monica council member Michael Feinstein: "The electorate's response to the ordinance...
...more than a dozen communities, from Los Angeles to Miami, have begun to target ATM surcharges. The most threatening to banks is New York City, where city council speaker Peter Vallone plans to unveil a proposal next month that would restrict ATM fees in the nation's financial capital. In Congress, Representative Bernard Sanders, a Vermont independent, has introduced federal anti-surcharge legislation. Even the Defense Department has joined the offensive: it wants to ban the fees from ATMs on military bases...
...surcharges are particularly galling to pols and consumer groups because they seem to amount to blatant double dipping. For example, a nondepositor who pays $1.50 for ATM cash often pays his own bank a $1-to-$2 fee for the same transaction. Such fees more than cover the cost of the transaction, which opponents put at 27[cents] per withdrawal. Says Santa Monica's Feinstein: "The banks say there is no free lunch for a service, when in fact they are asking us to pay twice for lunch...
...ATM WAR Legislators in several cities, angered by rising ATM fees, have simply outlawed them. But last week the banks struck back. Wells Fargo and Bank of America began barring noncustomers from using their ATMs in Santa Monica, Calif., after the city council banned surcharges. San Francisco residents may soon be facing the same fate. "The banks have a right to earn a return on their investment," argues Joseph Morford, a banking analyst for Dain Rauscher Wessels in San Francisco. The machines cost up to $50,000 each. But consumers now appear to be lowering their own costs by cutting...