Bloomberg News

BofA, Wells Fargo, JPMorgan Sued by ATM User Over Fees

October 19, 2011

(Updates with MasterCard comment in seventh paragraph.)

Oct. 19 (Bloomberg) -- Bank of America Corp., Wells Fargo & Co. and JPMorgan Chase & Co. were sued for allegedly colluding to fix the fees paid by consumers for access to automated teller machines.

The antitrust suit, brought in federal court in Washington by an ATM user and made public today, also names Visa Inc. and MasterCard Inc., the world’s biggest payment networks, as defendants. It’s the third lawsuit filed in Washington in the past week alleging price-fixing of ATM fees and surcharges.

“The violation in this case is a horizontal agreement among every bank that is a member of the Visa and/or MasterCard networks that charges ATM access fees on foreign ATM transactions,” the complaint alleges.

The suit was filed by a New Jersey man on behalf of consumers who “have been forced to pay artificially inflated, supra-competitive ATM access fees,” according to the filing.

Two earlier lawsuits, one filed yesterday and the other on Oct. 12, accuse Visa and MasterCard of antitrust violations for restricting independent ATM operators from charging varying, lower prices for customers using alternative networks such as STAR, Shazam Inc. or TransFund.

Uniform Agreement

Under a uniform agreement, the operators can’t charge less for transactions over a network that competes with Visa and MasterCard, according to complaints filed by ATM users and a trade group representing operators of automated teller machines.

James Issokson, a spokesman for MasterCard, based in Purchase, New York, said in an e-mailed statement that the lawsuits “challenging certain MasterCard ATM rules are without merit” and that the company will defend itself against them.

He said the rules were put in place to protect consumers from ATM operators seeking to impose “discriminatory surcharges” on cardholders.

Thomas Kelly, a spokesman for New York-based JPMorgan, and Will Valentine, a spokesman for San Francisco-based Visa, declined to comment on the suit. Jerry Dubrowski, a spokesman for Charlotte, North Carolina-based Bank of America, and Ancel Martinez, a spokesman for San Francisco-based Wells Fargo, didn’t immediately respond to telephone messages seeking comment.

Branded Cards

The three suits claim that the “overwhelming” majority of so-called PIN debit cards used for ATM transactions are branded by Visa or MasterCard. In order to accept one of these cards, an ATM operator must have access to the Visa and MasterCard networks. Independent or non-bank operators must be sponsored by a financial institution that is a member of the Visa and MasterCard networks.

Visa, MasterCard and their member banks require the service fee for any transaction at an ATM to be “no less than the amount charged at that ATM or terminal for a Visa or MasterCard transaction,” even for transactions that don’t use the companies’ networks, the lawsuits allege.

The lawsuit against the banks involve so called “foreign ATM transactions” in which a customer of one bank withdraws money from an ATM owned or operated by another bank. It seeks class action status on behalf of those who paid an access fee for a foreign ATM transaction since Oct. 1, 2007.

“By collusively agreeing to set a price floor for all ATM access fees at every ATM terminal throughout the country, the bank defendants and the bank co-conspirators shelter themselves from natural and beneficial price competition that otherwise would exist in the market,” the lawsuit claims.

The case involving banks is Genese v. Visa Inc., 11-1838; the case filed by ATM users is Barton v. Visa Inc., 11-1831; and the case filed by independent ATM operators is National ATM Council v. Visa Inc., 11-1803, U.S. District Court, District of Columbia (Washington).

--With assistance from Sophia Pearson in New York. Editors: Mary Romano, Fred Strasser

To contact the reporter on this story: Tom Schoenberg in Washington at tschoenberg@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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