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# Money from ATM fees held in escrow until court decides
- URL: https://www.smdp.com/money-from-atm-fees-held-in-escrow-until-court-decides/
- Published: 2002-12-21T16:00:00.000Z
- Updated: 2026-10-23T01:10:41.000Z
- Author: Guest Author
- Tags: Crime, Santa Monica, #archive-import

1999 after he realized he was charged twice when using ATM machines in San Francisco’s Chinatown. It irked him enough to bring the issue to the council, where the ban passed 4-3\. The council indicated that banks who allowed customers to be charged twice were ripping them off.

City officials and consumer advocates explain it this way: Customers who use an ATM machine at a bank other than their own pay not only a $1.50 fee, but $2 more tacked on by their own bank. Then there’s a third fee that is rarely discussed publicly called an “interchange fee.” That’s a fee customers don’t see because the banks privately charge each other for their customer’s withdrawals.

Adam Radinsky, a Santa Monica deputy city attorney, said federal banking regulations do allow local governments or city voters to adopt such rules. He said Arkansas, Mississippi and Wyoming have rules limiting the amount of ATM fees banks may charge.

He also argued that California consumer protection laws allow such ordinances.

“The ATM surcharge is an outrageous and duplicative fee that is unfair to consumers,” Radinsky previously told the Daily Press. “We’re disappointed with the court’s decision because it appears the court failed to address the opinions of cases in other cities.”

The decision upholds U.S. Circuit Judge Vaughn Walker, the San Francisco federal judge who blocked the ordinances from being enforced at the request of Bank of America, Wells Fargo Bank and others. In July 2000, Walker ruled that any local ordinances restricting automated teller machine surcharges violate both the National Banking Act and the Home Owners Loan Act, which govern nationally chartered banks and federal savings banks.

In essence, Walker said those congressional acts precluded local entities from enacting such legislation, a decision the appeals court affirmed Friday.

But Radinsky has argued that Walker’s interpretation of the law is wrong. The National Banking Act actually leaves open cities’ ability to regulate bank fees, he contends.

“The United States Congress has repeatedly spoke on this issue and emphasizes the right for cities to pass consumer protection laws like this,” Radinsky told the Daily Press in January. “The district court got it wrong, and we are confident that the law is on our side.”

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

Banks in Santa Monica were forced to drop the extra fees for a couple of weeks directly after the ban went into effect in 1999\. Later, Wells Fargo and Bank of America — the state’s two largest banks — filed the suit in San Francisco.

The original hearing convinced a judge to make the banks put ATM fees collected into escrow for possible return to customers. As a result, banks were ordered to put all the fees into that escrow account until the issue is decided in court. That account has grown to well over $1 million.

Banks say they need the surcharges to expand their ATM networks. Consumer organizations that back the bans say the fees merely pad bank profits.

*Originally published in the Santa Monica Daily Press print edition on December 21, 2002.* [Read the original PDF.](https://s3.us-east-1.amazonaws.com/smdp%5Fbackissues/122102.pdf?ref=smdp.com)