For immediate release - Thursday, March 7, 2002.
Contact Bob Brammer - 515-281-6699.
Attorney General's Office Statement on ATM-fee Decision
Statement of the Attorney General's Office, Thursday, March 7:
DES MOINES.This case was filed by five national banks challenging the authority of the State Superintendent of Banking and the State
of Iowa to prohibit the banks from charging fees to non-customers who use their ATMs. The basis for the banks' claim
was that federal law -- the National Bank Act -- allows the banks to charge any types of fees they wanted to charge. The
banks argued that this federal law preempted state law, thereby making it illegal for the State to enforce its regulations
against the banks.
The State of Iowa defended this case arguing that the state regulations at issue were permissible under federal law for two
First, Iowa law already allows banks to charge when non-customers use their ATM's. Instead of charging the ATM users
directly, the banks charge the banks of the non-customers. In the 12 months preceding the lawsuit, the 5 plaintiff banks
received more than $3 million in such fees. Because the banks already were receiving sufficient fees to cover their ATM
costs and make a profit, the State argued that Iowa law did not significantly interfere with the banks' powers under the
National Bank Act.
Second, another federal law, the federal Electronic Funds Transfer Act, explicitly allows state regulations if they are
consumer protection laws. The Iowa law was intended to protect consumers by ensuring that ATMs were available to all
consumers in all communities in Iowa on a non-discriminatory basis. The State argued that, if banks were allowed to
assess fees directly when non-customers use their ATMs, the amount of such fees could vary from ATM to ATM, and
from community to community, thereby making ATMs available on an unequal basis..
The United States District Court ruled yesterday that the National Bank Act preempted the Iowa law and the Court
permanently enjoined the State from enforcing its law against ATM fees. Iowa was the last state in the nation to
successfully prohibit ATM fees.
Within the next 30 days, the Attorney General's Office and the Superintendent of Banking will consider the ramifications
of the Court's decision and the options available to the State, including the option of appealing the decision.
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