Appeals court nullifies bans by on ATM fees

SAN FRANCISCO -- A federal appeals court Friday threw out two California municipal bans on certain ATM fees charged by banks, saying local law takes a back seat to federal regulations on the issue.

The City Council of Santa Monica and San Francisco voters had no authority to approve identical laws in 1999 banning a bank from charging an ATM fee to a customer who was not a member of the bank, said the 9th U.S. Circuit Court of Appeals.

Federal banking regulations allow banks to charge fees for ATM usage.

The 3-0 decision upholds a federal judge in San Francisco who blocked the ordinances from being enforced at the request of Bank of America, Wells Fargo Bank and others.

The cities said they were mulling over whether to appeal to the U.S. Supreme Court, or whether to ask the appeals court to reconsider its decision.

Adam Radinsky, Santa Monica deputy city attorney, said federal regulations allow local governments or city voters to adopt such rules.

"The ATM surcharge is an outrageous and duplicative fee that is unfair to consumers," Radinsky said.

Leland Chan, a lawyer for the California Bankers Association, said the bans were contrary to free-market capitalism.

"Can you imagine voters telling Intel how much to charge for its chips?" he asked.

The law doesn't challenge fees a bank charges its own customers to use a different bank's ATM. Those fees range around $2.