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Consumer News Release

For immediate release -- Wednesday, February 2, 2000.
Contact Bob Brammer -- 515-281-6699

State of Iowa Asks U.S. Supreme Court to Uphold Iowa's ATM Law

"We are asking the Court to uphold Iowa's law that requires universal ATM access without surcharges to all cardholders in the State," Miller says.

DES MOINES-- Attorney General Tom Miller and Iowa Banking Superintendent Holmes Foster are asking the United States Supreme Court to uphold Iowa's Electronic Funds Transfer (EFT) Act that governs ATM machines in Iowa.

"We are asking the Court to uphold Iowa's law that requires universal ATM access without surcharges to all cardholders in the State, no matter who controls the ATM machine a consumer is using," Miller said. Iowa's petition was filed at the Supreme Court on Wednesday.

Bank One, Utah, has challenged Iowa's law, contending that national banks are excepted from the scope of Iowa ATM law by the National Banking Act. Last fall, in a divided 2-1 decision by a three-judge panel, the Eighth Circuit Court of Appeals largely sided with Bank One. Miller argues that a separate federal law, the Electronic Funds Transfer Act, makes national banks subject to Iowa's EFT law.

"We urge the Court to take up the matter because several key principles are at stake. First, it's a matter of protecting consumers. Iowa's law protects all ATM users in various ways, including prohibiting surcharges against cardholders simply for using an ATM," Miller said.

"We also argue for the basic principle that consumer protection is a traditional power of the States and should not be preempted," he said.

"We argue that there should be competitive equality between all financial institutions, and that national banks such as Bank One are merely seeking to tilt the playing field in their favor when it comes to ATMs. If the sweeping conclusion of the Eighth Circuit leads to dismantling all state regulations as they apply to national banks - including bans on ATM fees and surcharges - then competitive equality will stop short of the doorsteps of small banks in rural states like Iowa," he said.

In 1997, Bank One installed ATMs in several Sears, Roebuck & Co. stores in Iowa, even though it had no office, branch, or agreement with a financial institution having an office in Iowa, as required by Iowa law and regulations. State Banking officials ordered Bank One to remove the ATMs, which Bank One did. But Bank One asked a federal court to block the state enforcement action on the ground that the National Banking Act pre-empted certain provision of Iowa's EFT law.

Iowa defended its EFT statute on the basis of the anti-preemption provision of the federal Electronic Funds Transfer Act (EFTA), which says a state law is not inconsistent with the EFTA if the protection the state law provides any consumer is greater than the protection afforded by the EFTA.

U.S. District Court Judge Ronald E. Longstaff found no preemption of Iowa's EFT law. Bank One appealed to the Eighth Circuit. Now the State has asked the U.S. Supreme Court to hear the matter. Iowa's "petition for a writ of certiorari" was filed Wednesday at the Supreme Court in Washington, D.C.

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