O1958 (2)
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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
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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
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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
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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
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(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
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official newspaper within 15 days after Its adoption This Ord Inance shall become
effective 30 days from Its adoption
APPROVED AS TO FORM
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MA~SHAJONES MOUTRI E .
City Attorney-
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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
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Mana M Stewart. CIty ~