HARTFORD, Conn. (AP) — State lawyers are spending a lot of time in
court this week, defending Banking Commissioner John Burke’s decision to
ban the fees banks have been charging non-customers to use automated
teller machines.
For the second time in as many days, a judge turned down a bank’s
request to keep those fees in place.
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Burke also was hit with a second federal lawsuit alleging he is
violating the rights of the banks, according to the department.
The legal battles stem from a federal appeals court decision issued last
week that cleared the way for Burke to halt the $1 fees.
“In essence we’re fighting trench warfare in the courts day-by-day,”
said state Attorney General Richard Blumenthal. “My only wish is that
the banks were devoting some of the energy and money they’re spending on
this pitched battle to improve the services they provide customers _
we’d all be winning if they did.”
Connecticut and Iowa are the only two states that prohibit the charges,
which banks call “convenience fees.”
Burke contends a 1976 state law prohibiting banks from enforcing
surcharges on non-customers.
“Banks are allowed to charge each other all they want. They can charge
their own customers all they want. But it is our judgment that the law
precludes them from adding this additional, second charge,” Burke said.
The banks contend the law should not apply, because it predates the
widespread use of ATMs.
Fleet Bank contends the ban on the fee costs them $15,000 every day. Its
machines stopped assessing the extra charge at 12:30 p.m. Hours later,
the bank’s officials headed to Hartford Superior Court in an
unsuccessful attempt to block Burke’s order.
Hartford Superior Court Judge Samuel Freed rejected Fleet’s contention
that Burke should not be able to issue an emergency cease-and-desist
order. The emergency nature of the order meant it immediately went into
effect, and did not need an administrative hearing.
Banking Department spokesman David Tedeschi said the banks may have to
refund people money if they still were charging the fees after the
emergency order was issued, he said.
Fleet also went to federal court in Bridgeport to file a lawsuit
contending that Burke is violating the banks’ rights. A similar lawsuit
was filed by First Union National Bank in Hartford federal court,
according to the Banking Department.
Fleet Bank, First Union and BankBoston began charging non-customers in
Connecticut $1 for the use of their ATMs last month after a federal
judge ruled the Connecticut law banning the fees was outdated.
Last week, the 2nd Circuit Court of Appeals ruled that Fleet’s fight to
impose the fee must be heard at the state level, not in federal court.
Over the past decade, banks have looked to assess new fees as they have
lost hold over other, lucrative aspects of their industry, industry
officials said.
“The transactional side of the banking business has been looked to not
just as a service to be given away, but as a profit source,” said Gerald
Noonan, president of the Connecticut Bankers Association.
The American Bankers Association, a trade association based in
Washington, contends banks need to assess charges to subsidize ATMs
because the machines have not saved banks money.
Customers still use tellers and now also use ATMs, sometimes more
than once a day, said John Hall, spokesman for the association.
“The marketplace should decide prices for ATMs, not the government,
and the price controls only inhibit innovation and put a halt to ATM
growth and would shut down thousands of machines … with (convenience
fees) in mind,” Hall said.
Whatever the justifications, consumers such as Nancy Schuley — who
paid the extra fee at a BankBoston ATM before Burke issued the order —
said they were upset.
“It’s supposed to be a convenience for the consumer and it’s as if
the consumer’s being duped,” said Schuley, a Bethlehem resident who does
banking for her husband’s production and distribution business.
“It’s yet another thing we have to put up with in this fast-paced
world,” she said.
