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O1958 (2) f \atty\munr\laws\mJm\atm2-1 wpd City Council Meeting 10-12-99 Santa MOnica, California ORDINANCE NUMBER1958 (CCS) (CIty CouncIl Senes) AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA ADDING SECTION 4 32 040 TO THE SANTA MONICA MUNICIPAL CODE, PROHIBITING SURCHARGES TO NON-CUSTOMERS AT AUTOMATED TELLER MACHINES IN SANTA MONICA THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES HEREBY ORDAIN AS FOLLOWS Section 1 Findings and Purpose The City Council of the City of Santa Monica hereby finds and declares that A In recent years, financial mstltutlons have begun Imposmg new and exorbitant fees on consumers These fees have been Increasing at more than double the rate of InflatlOn B Many of these fees are Imposed for services which were routinely provided without charge only a few years ago C One particularly onerous new fee IS a surcharge that financial institutions Impose upon non-accou nt holders for uSing their Automated Teller Machines (A TMs) ThiS fee IS In addition to the fee that financial Institutions already charge their account holders for usmg another institution's ATM Together, these two fees total an average of$2 57 per 1 transaction, which equates to more than a 10% charge for withdrawing $20.00 of one's own funds through an ATM o These exorbitant surcharges are not necessary either to compensate financial institutIons for use of their A TMs or to finance new A TM machmes because the InstItutions are already compensated Financial Institutions already receive a payment (called an "Interchange fee") from the ATM user's home bank for provldmg the service of the ATM This cost, In turn, IS passed on to the ATM user by hiS or her home bank m the form of a "foreign fee" Since fmanclallnstltutlons are already being compensated for providing their ATMs to non-account holders, the recently-enacted surcharges represent a form of pure profit that bears no relation to actual cost E The Imposition of double charges detrimentally Impacts competition by giving large financial institutions an unfair advantage over small banks and credit Unions, which tend to provide higher Interest, lower fees, and more consumer-friendly service, particularly to the elderly and young people F The surcharge IS also antlcompetltlve and unfair since It removes any competition from the process of fee-settmg For more than twenty years, Without the surcharge, fmanclallnstltutlons negotiated mterchange fees and other fees With the ATM networks, and WIth each other ThIS form of negotiation served to keep fees reasonable, since all parties had an mterest In keeping their own costs down However, when the consumer bears the full brunt of a new fee, he or she has no leverage to negotiate With the financial institutions, and the result IS unreasonable fees 2 G Federal and state laws do not remedy the deleterious effects of these surcharges Local legIslation IS therefore essentIal to safeguard the general welfare In Santa Monica by protecting consumers from exorbitant and unfair fees and protecting smaller financial institutions from antlcompetitlve business practices Section 2 Section 432 040 IS hereby added to the Santa MOnica MUnicipal Code to read as follows Section 4.32.040 Automated Teller Machine Surcharges. (a) Definitions The follOWing words and phrases shall have the follOWing meanings when used In thiS SectIon' Access To use any function on the ATM, rncludlng cash withdrawal and fund transfer Access Device A card, code, or other means of access to a customer's account, or any combination thereof Automated Teller Machine or ATM Any electronrc mformatlon processing device that accepts deposits or dispenses cash In connection with a credit, deposit, or convenience account The term does not Include devices used solely to facIlitate check guarantees or check authorizations, or which are used In connection with the acceptance or dispensing of cash on a person-to-person basIs, such as by a store cashier Financiallnstitution Any bank, savings associatIon, savings bank, credit union, or Industrralloan company 3 User. A natural person to whom an access device has been Issued for personal, famIly, or household use (b) Prohibition on Certain Fees A financial institutIon may not Impose a fee of any kind on a user for accessing an A TM of that financial institution located In the City of Santa MOnica with an access device not Issued by that financial institution (c) Enforcement and Penalties (1) Civil Action Any person Injured by a violation of this ordinance may enforce ItS provIsions by means of a cIvil action (A) Any financial institution that violates this ordinance shall be liable to the person Injured for the actual damages as determined by a JUry, or a court sItting without a JUry, but in no case less than $250 (B) Any financial institution that violates thIs ordinance shall also be liable for reasonable attorneys' fees and court costs as determined by the court In cases where the financial institution has engaged In a pattern of Willful violations, the financial institution shall be liable for punitive damages not to exceed $5,000 per violation (2) Injunction (A) Any financIal institutIon that commIts an act or engages In any pattern and practice In violation of thiS ordinance may be enJoined therefrom by any court of competent JUriSdiction 4 (8) Actions for inJunction under this subsection may be brought by any person Injured by a vIolation of thIs ordInance, by the City Attorney, by the District Attorney, or by any person or entity which Will fairly and adequately represent the Interests of the protected class (3) Nonexclusive Remedies and Penalties Nothing In thiS Section shall preclude any person from seeking any other remedies, penalties or procedures proVided by law SECTION 3 Any provIsion of the Santa MOnica MUniCipal Code or ItS appendices inconsistent with the provIsions of thiS Ordinance, to the extent of such inCOnsistencies and no further, IS hereby repealed or modified to the extent necessary to effect the provIsions of thiS Ordinance SECTION 4 If any section, subsection, sentence, clause, or phrase of thiS Ordinance IS for any reason held to be invalid or unconstitutional by a decision of any court of competent JUriSdiction, such decIsion shall not affect the validity of the remaining portions of thiS Ordinance The City Council hereby declares that It would have passed thiS Ordinance and each section, subsection, sentence, clause, or phrase not declared InvalId or unconstitutional without regard to whether any portion of the ordinance would be subsequently declared invalId or unconstItutional SECTION 5 The Mayor shall sign and the City Clerk shall attest to the passage of thiS Ordinance The City Clerk shall cause the same to be published once In the 5 official newspaper within 15 days after Its adoption This Ord Inance shall become effective 30 days from Its adoption APPROVED AS TO FORM 1..... J', / , " '~ [,"' '-- " r\ , , !r J ". " It feu..- ~/1UA.:./j jj ./kkK....e- MA~SHAJONES MOUTRI E . City Attorney- 6 Adopted and approved thIS 12th day of October. 1999 v 1::::ayor State of Cal1forma ) County of Los Angeles) ss CIty of Santa MOllIca ) L Mana M Stewart, CIty Clerk of the Cny of Santa MOllIca, do hereby certIfy that the foregomg Ordmance No 1958 (CCS) had Its second readmg and was adopted on October 12, 1999. by the followmg vote Ayes CouncIl members Femstem, Bloom, McKeown, Mayor Pro Tern Genser Noes CouncIl members Holbrook. Rosenstem. Mayor o . Connor Abstam CouncIl members None Absent CouncIl members None ~~~. oAJ- Mana M Stewart. CIty ~