ATM Fees Face Well-Armed Foe

It might be easy to dismiss a ban on ATM surcharges by the city of Santa Monica, which resulted this week in the revival of its old nickname: “The People’s Republic of . . . “ But the nation’s banks have been given a clear warning. Customers are fed up with rising fees, such as the $1 to $3 surcharge for using another bank’s ATM machine. Cities, states and even the U.S Defense Department have heard the outcry.

The Pentagon wants to bar ATM surcharges by banks and credit unions on domestic military bases. The oft-transferred and low-paid troops can’t afford the frequent charges, the military argues. Los Angeles and San Diego are considering bans. San Franciscans vote on one next month.

The Defense Department has broad latitude to decide the rules on military property, but its rule extends no farther. Connecticut and Iowa are engaged in costly and thus far inconclusive court battles over their bans on ATM surcharges. And the courts ultimately may rule that only Washington, not local or state governments, can enforce laws on nationally chartered banks.

So it’s still up to consumers to watch out for themselves and seek out the bank or credit union that charges the smallest ATM fees.

Meanwhile, the banking industry has a choice. Most banks have recovered from Russia’s devaluation and last year’s Asian economic crisis. Profits look good again. So the industry can stage one legal battle after another or rethink its ATM fees. That should be a fairly easy call to make.