Prepared Testimony of U.S. Senator Michael B. Enzi (R-WY)
Hearing on the General Accounting Office Report on ATM Surcharges
June 11, 1997
Good morning, Mr. Chairman. Thank you for holding this
important hearing. The use of ATM services is rising every year in
terms of both the number and the total value of these transactions. The
ATM is now a part of our American culture. In fact, they have become a
necessity for many Americans. Restricting or banning ATM fees would
have an enormous impact on both consumers and the financial
institutions they have come to rely on to safeguard their checking and
savings accounts.
When I was in the Wyoming state legislature, legislation concerning
ATM surcharges was brought up for consideration. We supported
requiring two disclosures on all ATM machines: one on the machine
itself, and another in the form of a warning on the ATM screen that
appeared before the transaction was completed. We also provided the
consumer with an option to cancel the transaction before it was
completed and avoid the fee altogether. We also set a maximum fee that
could be charged. I think the notification requirements are important in
the Federal legislation. I know how much emotion went into the setting
of fee maximums. I would
not want to take away anything from state's efforts.
For me, the argument against regulating ATM fees any further is
quite simple. The free market system works best without government
intrusion. If consumers are aware and properly notified of the fees that
are required for transactions they have chosen to request, then financial
institutions have a right to charge these fees. ATM transactions are a
contractual agreement between a financial institution or provider and the
customer. As is the case with other contracts, fees and costs associated
with the use of an ATM should be fully and clearly disclosed.
There is no question that consumers have greatly benefitted from
the growth of ATMs and the services they provide -- and there are a
wide variety to chose from. Consumers can decide which financial
institution to bank with based on service, quality, and the cost of the
services it provides. And we shouldn't eliminate efforts already debated
and settled on the state level.
It should not be the responsibility of Congress to micro-manage
every aspect of our daily lives. The consumer is free to choose a
financial institution that best suits his or her needs and requirements.
Since ATM fees are currently an option that consumers can either accept
or refuse, the only enhancement that would further protect consumers is
to require that the amount of the fee be disclosed prior to the completion
of the transaction. Anything more would be unnecessary and
unwarranted government intrusion, anything less would be a simple case
of ignoring our congressional responsibility to protect consumers from
hidden costs and undisclosed charges.
I believe that banning ATM fees will ultimately harm consumers
and infringe on decisions already fought on the local level. If financial
institutions are not allowed to charge fees for the ATM services they
provide, they will most likely increase or impose new fees for other
banking services. Free competition and the ability of consumers to
choose their financial institutions will keep the cost of financial services
at a fair market level. Consumers can and will find other avenues, such
as check cashing outlets, point of sale terminals, "check" credit cards,
and live tellers to access their money. The availability of the various
cash disbursement services gives the consumer other choices and
ensures competitive pricing by all institutions that provide related
services. When the government starts meddling in the business of fixing
prices, it is difficult for the government to know when to stop impinging
on the free market system.
ATM network rules already require fee disclosure on both the
screen during the transaction and on the receipt after it is completed. In
addition, the customer has the option of canceling the transaction before
it is completed. It is for these reasons that I am opposed to banning
ATM fees and surcharges. The ultimate effect of any ban will hurt
consumers. We all have the responsibility to familiarize ourselves with
the details of the terms and conditions of all agreements and contracts
we enter into. At present, consumers have the ability to switch financial
institutions, they can disengage from a transaction, and they must be
adequately notified of all fees before engaging in transaction. As long as
these conditions are met, these ATM fees should not be banned. The
American free market system should not be restricted to the extent that
competition is squelched and the growth of this industry is limited by
unnecessary regulation.
I look forward to hearing the testimony of the witnesses to see if
the current disclosure requirements are sufficient for consumer
protection.
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