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US District Court Judge Issues Ruling
on ATM Surcharges

October 1, 1998 -

Connecticut Banking Commissioner John P. Burke said Thursday that he would not challenge US District Court Judge Janet Bond Arterton's ruling that will allow Fleet National Bank to charge a transaction fee to non-customers who access their bank accounts from a Fleet automated teller machine.  In an opinion issued three years ago, Burke claimed that existing state law regarding the establishment and operation of ATMs prohibited any bank or credit union from charging a so-called surcharge to non-customers of that bank or credit union.  Fleet protested and challenged Burke's interpretation of that state law in federal court.

In the court case filed more than 18 months ago, Fleet claimed the transaction fee should be permissible and argued it is a necessary fee in order to recoup a portion of the expenses incurred by the bank to establish and maintain the ATMs.  Burke maintained that it was acceptable for a customer's own bank to charge him or her for using another bank's ATM but that any additional second charge, or surcharge, by the other bank would be illegal.

State Attorney General Richard Blumenthal concurred and represented Burke in his move to block Fleet's effort to impose surcharging in Connecticut.

Burke, upon learning of Judge Arterton's decision, was disappointed but pleased that the banking department had been successful in preventing such charges from being passed on to the consumer while the judge deliberated her ruling.  Besides Connecticut, Iowa is the only other state to have banned ATM surcharges.

"From the very beginning, I indicated I would abide by the judge's ruling in this case," Burke said.  "My role is to enforce the law as it is written.   If state legislators wish to enact a direct ban on surcharges, they have the power to do so," he added, explaining that he is considering a recommendation to Governor John G. Rowland that non-bank entities be allowed to own and operate ATMs in Connecticut.   Such a move would also require legislative approval.  Presently, only banks and credit unions can establish ATMs in Connecticut.

"In allowing these entities into the ATM marketplace, the Connecticut consumer will have additional choices and the increased competition will establish the reasonableness of the fee structure," said Burke.