Smart Voter
San Francisco County, CA November 2, 1999 Election
Proposition F
ATM Fees
City of San Francisco

Majority Vote Required

122,500 / 66.20% Yes votes ...... 62,509 / 33.70% No votes

See Also: Index of all Measures

Infomation shown below: Summary | Fiscal Impact | Yes/No Meaning | Arguments | Full Text
Shall the City prohibit banks and other financial institutions from charging a fee to persons who do not have an account with that bank for use of the bank's automated teller machines in San Francisco?
Summary Prepared by Ballot Simplification Committee:
THE WAY IT IS NOW: The City does not prohibit fees charged for use of automated teller machines (ATMs).

THE PROPOSAL: Proposition F is an ordinance that would prohibit any bank or other financial institution defined by the ordinance from charging a fee to a person who does not have an account with that bank for using one of that bank's ATMs in San Francisco.

Fiscal Impact from the City Controller Edward Harrington:
Should the proposed initiative be adopted, in my opinion, it should not affect the cost of government.

Meaning of Voting Yes/No
A YES vote of this measure means:
If you vote yes, you want to prohibit banks and other financial institutions from charging a fee to persons who do not have an account with that bank for the use of that bank's ATMs in San Francisco.

A NO vote of this measure means:
If you vote no, you want to allow banks and other financial institutions to continue to charge such fees.

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Arguments For Proposition F Arguments Against Proposition F
Big banks in San Francisco recently started charging double fees at their ATMs when consumers with bank accounts elsewhere withdraw money. These are double fees - the new $1-2 fee comes on top of the $1-2 that your own bank has always charged to use ATMs elsewhere. This practice was prohibited by ATM network rules for 20 years.

Banks and networks have always split the first fee (charged by your own bank) to recover the costs of transactions, which is fair enough. But the second fee is double-dipping and gouges consumers. It's also an anti-competitive pricing practice. Here's why:

Big banks instituted the double-charge because they realized they had many more ATMs. By charging non-customers twice for ATM transactions, banks make it very expensive for consumers to remain with small banks and credit unions with fewer ATMs. For example, when a non-customer uses a Wells Fargo ATM, the screen often asks, "Want to avoid costly fees? Sign up for an account with Wells Fargo today."


Fact - An April CALPIRG study found that 99% of bank ATMs now impose double fees.

Fact - Banks put in ATMs originally because they were money-savers. Now banks call ATMs a "consumer convenience" and are trying to gouge for it.

Fact - Both the City Attorney and the League of California Cities have said that it is legal for San Francisco to prohibit banks from double-charging, including federally-chartered banks.

Send the big banks a message. Please join consumer, senior, and labor organizations - including CALPIRG, the American Association of Retired Persons (AARP), and the San Francisco Democratic Party - in voting YES on Proposition F.

Board of Supervisors President Tom Ammiano

Rebuttal to Arguments For
Politicians like Tom Ammiano and the proponents of Proposition F say it will help small banks. It won't. In fact, it does exactly the opposite. That's why EVERY neighborhood and minority bank headquartered in San Francisco OPPOSES F.

Despite what proponents claim, most legal experts agree that the big national banks will likely be exempted from F because they are governed by federal law. This flawed measure may only apply to small, neighborhood banks representing less than 10% of ATMs in San Francisco. When something similar to F was tried in Iowa, a federal regulatory agency overruled the measure. San Francisco taxpayers could get stuck paying millions of dollars defending a flawed ballot measure. Taxpayer funds should be used for real problems like affordable housing, homelessness and MUNI.

Ultimately, Prop. F is bad for consumers. Many banks could stop providing access to ATMs except for their own customers. You now have a choice of ATMs, but if F passes, you could lose your right to CHOOSE the convenience of using another bank's ATM. Under F, you lose both choice and convenience.

A diverse coalition opposes F, including the FDR Democratic Club for Seniors and People with Disabilities, SF Chamber of Commerce, Black Chamber of Commerce, Asian Business Association, Council of District Merchants, Small Business Network and San Francisco Planning and Urban Research (SPUR). Please vote NO.

Coalition for ATM Choice


Here's why Prop F won't work for San Francisco:

Limits consumer choice and convenience. You never pay a fee when you use an ATM from your own bank. Sometimes, however, it's just more convenient to use another bank's machine. If Prop F passes, you could lose your ability to choose which ATM machine to use because banks may stop allowing non-customers to use their machines.

Unenforceable. The largest banks in San Francisco are chartered by federal law and may not be subject to Prop F. An expensive and time-consuming legal battle defending Prop F will cost taxpayers precious dollars that should be used for things such as fixing Muni, not wasted on a flawed ballot measure.

Hurts neighborhood banks. Prop F will discriminate against small community banks and credit unions because the big banks will be exempt. That's why every neighborhood bank headquartered in San Francisco opposes Prop F.

Too Extreme. ATMs are costly to purchase, install and maintain. Under Prop F, you may have to pay more so others can use your bank's machines for free. Forcing banks to provide non-customers with free services could easily result in banks restricting access to their own customers.

A dangerous intrusion into regulating private-sector business. Attempting to regulate ATM fees is counterproductive. Open markets create choice and drive down prices.

G. Rhea Serpan, president & CEO of the San Francisco Chamber of Commerce, is right when he says: "Protect your right to convenience and choice. Don't waste taxpayer dollars on a ballot measure that won't work."

Vote NO on F.

A. Lee Blitch
2000 Chair
Board of Directors
San Francisco Chamber of Commerce

Rebuttal to Arguments Against
The bankers and their big bucks lobbyists want you to believe their hype about Proposition F.

The bankers say:

"ATM Fees are fair." Do you think a $4 fee to withdraw $20 of your own money is fair? The transaction costs around 50 cents and they're taking a huge profit margin from YOUR account. The first fee more than covers the costs; Proposition F eliminates the second fee only.

"Our ATM Fees are necessary." But we know that ATMs SAVE money for banks because they're cheaper than paying human tellers. That's why banks installed 120,000 ATMs BEFORE the ATM surcharge that they call "necessary" was ever imposed.

The bankers say: "Only the federal government can write laws governing ATMs." But Iowa and Connecticut have laws on the books prohibiting these fees and the Electronic Funds Transfer Act specifically allows states and municipalities to regulate ATM transactions.

Banks are charging these new ATM fees not because they have to, but because they can. The big banks want to protect one thing
- their excessive profits. And if they get away with this, soon all banks will start charging their own customers to use their ATMs
- some banks have already even started.

On November 2nd, join consumer groups, senior organizations, labor and community leaders in voting YES ON PROPOSITION F. It's time to put an end to double-ATM Fees.

Tom Ammiano
President, San Francisco Board of Supervisors

Text for Proposition F
Be it ordained by the people of the City and County of San Francisco:

Section 1. Findings and Purpose.

The people of the City and County of San Francisco find and declare that: The rates and types of fees charged by financial institutions have increased at an alarming rate in recent years. According to a study conducted by the United States Public Interest Research Group (USPIRG), from 1993 to 1995, the rate of bank fees nationwide increased at least double the rate of inflation, as measured by the Consumer Price Index. The USPIRG study also found, from 1993 to 1995, average monthly maintenance fees for regular (non-interest bearing) checking accounts increased 22 percent.

Much of the increase in the overall amount of fees comes from the imposition of new fees. Banks now charge "human teller," "deposititem return" (charge against persons depositing checks from others that bounce), "telephone access," and "computer access" fees. Only a few years ago, these services were provided for free.

Another of the new "fees" is a surcharge that many financial institutions impose on non-account holders for using their ATMs. This surcharge is in addition to an "off-us" fee that nearly all financial institutions already charge their account holders for using another institution's ATM. Together the surcharge and the "off-us" fee can total $4.00 for a mere $20.00 withdrawal. According to USPIRG, the average total is $2.41 per transaction, an amount that can still equal more than a 10% charge for withdrawing $20.00 of an account holder's own funds.

Industry advocates contend that ATM surcharges are necessary to compensate institutions for the use of their ATMs. However, those advocates fail to acknowledge a significant portion of the off-us fees are already paid to the institutions that own the ATM used by the non-account holder. Industry advocates also contend that ATM surcharges are necessary to finance the cost of installing new ATMs. However, as Senator Alfonse D'Amato testified on the floor of the Senate this year, "122,000 out of the 165,000 machines [in existence nationwide] were installed well before the double charges."

Despite the fact that financial institutions are already compensated for the use of their ATMs by non-account holders and the fact that they have proven themselves capable of installing tens of thousands of new ATMs without the imposition of ATM surcharges, financial institutions are imposing ATM surcharges in record numbers. According to Senator D'Amato, at the beginning of 1996, only 17% of ATMs imposed such surcharges. By 1998, the number of ATMs imposing surcharges has increased to 79%.

Imposition of ATM surcharges raises serious anti-competitive concerns. Large financial institutions with more ATMs (in California, just two banks own more than 60% of the ATMs in the state) are able to impose higher costs on account holders of small institutions who in many cases have little choice but to use the ATMs of the large institutions. Account holders who wish to avoid these surcharges are pressured to defect from small institutions to large institutions. This presents a perverse form of price competition where institutions can actually gain customers by raising prices. As University of Houston economist Paul Horvitz observed, "there is little downside to such a strategy - either you gain substantial market share or earn substantial fee income."

Small banks and credit unions serve important functions in the local community by servicing segments of the population that might otherwise be neglected. Recent studies by the Federal Reserve Board and consumer groups have shown that credit unions and small banks tend to offer higher interest rates on deposits and tend to charge lower account fees. They are also often the leaders in providing the most efficient, consumer-friendly levels of service. Losing or even hobbling these efficient and low-cost institutions harms all customers. The elderly, who are often dependent on fixed incomes, are even more likely to be harmed because of their greater reliance on the higher rates of return offered to account holders at these smaller institutions. Likewise, younger persons in school or beginning careers are more likely to be harmed because of their reliance on lower account fees charged by the smaller institutions.

Federal and State laws do not adequately address the unfairness and anti-competitiveness of surcharges. Therefore, the Board finds that an ordinance prohibiting financial institutions from imposing a surcharge on non-account holders using their ATMs located in San Francisco is essential for the promotion and protection of the general welfare of the citizens of San Francisco. The purpose of the prohibition is to protect consumers from exorbitant and unfair fees and to protect smaller financial institutions from anti-competitive business tactics.

Section 2.Chapter VIII, Part 2 of The San Francisco Municipal Code (Police Code) is hereby amended by adding Section 648.1 thereto, to read as follows:

Section 648.1. ATM Surcharges

(a) Definitions.

(i) "Access" means to use any function on the ATM, including but not limited to cash withdrawal, fund transfer, etc.

(ii) "Access device" means a card, code, or other means of access to a customer's account, or any combination thereof, that may be used by the customer to an initiate electronic fund transfer.

(iii) "Automated teller machine (ATM)" means any electronic information processing device that accepts 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.

(iv) "Customer" means a natural person to whom an access device has been issued for personal, family, or household use.

(v) "Financial institution" means any bank, savings association, savings bank, credit union, or industrial loan company.

(vi) "Surcharge" means any fee charged by the financial institution for the use of the ATM.

(b) Prohibition on Certain Fees.

A financial institution may not impose a surcharge of any kind on a customer for accessing an ATM of that financial institution located in the City and County of San Francisco with an access device not issued by that financial institution.

(c) Enforcement and Penalties.

(i) Civil Action. Any person injured by a violation of this ordinance may enforce its provisions by means of a civil action.

(1) 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 sifting without a jury, but in no case less than $250.

(2) Any financial institution that violates this ordinance shall also be liable for such attorney's fees and court costs as determined by the court. Furthermore, 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.

(ii) Injunction.

(1) 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.

(2) Action 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.

(iii) Nonexclusive Remedies and Penalties.

Nothing in this Section shall preclude any person from seeking any other remedies, penalties or procedures provided by law.

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Created: November 18, 1999 14:59
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