HBA-ATS H.B. 2305 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2305 By: Maxey Financial Institutions 3/14/1999 Introduced BACKGROUND AND PURPOSE The number of automated teller machine (ATM) cardholders continues to grow in the United States. Consumers use ATMs because of their convenience. Banks and other ATM owners and operators realize that cardholders will pay for that convenience. However, cardholder willingness to pay is limited and transaction fees are a concern to consumers. Charged by the legislature to study ATM fees, the Interim Committee on Financial Institutions concluded that consumers who use ATMs that dispense "scripts" in lieu of cash are likely to be charged three separate fees. A script machine prints out a receipt that the consumer must redeem for cash, usually with a cashier in another location of the establishment in which the ATM is located. Typically, the establishment charges the customer a fee for this exchange. In addition to this fee, a consumer may have to pay a surcharge (the fee that the owner of an ATM charges a cardholder for the convenience of using the machine) and "off-us" fees (fees charged to a bank's customer for using an ATM not owned by that bank). Although the committee acknowledged that these types of transactions constitute a small percentage of all ATM transactions, it noted that these transactions create a situation in which a consumer could be charged burdensome fees. The committee recommended that legislation be drafted that regulates script machines and the ability of the establishment's owner or operator to charge a fee in addition to the surcharge and off-us fee. H.B. 2305 prohibits a person from charging a fee for the use of an automated teller machine not owned by a financial institution, except that the owner of an ATM is authorized to charge a user a transaction fee for a transaction made by the user at the ATM. However, the owner of the ATM is required, before the transaction is completed, to disclose to the user the amount of the fee charged for use of that ATM and to allow the user to cancel the transaction without incurring the fee. This bill also authorizes a financial institution to charge its own customer a transaction fee for a transaction the customer makes relating to the customer's account using an ATM not owned by the financial institution. In addition, this bill provides that a person who violates the law is liable for a civil penalty of not more than $500 for each violation. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Subtitle Z, Title 3, Finance Code, by adding Chapter 277, as follows: CHAPTER 277. AUTOMATED TELLER MACHINE Sec. 277.001. FEE LIMITATION. (a) Defines "financial institution." (b) Prohibits a person from charging a fee for use of an automated teller machine (ATM) not owned by the financial institution except as provided by this section. (c) Authorizes a financial institution to charge its customer a transaction fee for a transaction the customer makes relating to the customer's account using an ATM not owned by the financial institution. (d) Authorizes the owner of an ATM to charge a user a transaction fee for a transaction made by the user. (e) Requires a person who charges a transaction fee authorized by Subsection (d), before the transaction is completed, to disclose to the user the amount of the fee charged for use of that ATM, and to allow the user to cancel the transaction without incurring the fee. (f) Provides that a person who violates this section is liable for a civil penalty of not more than $500 for each violation. Authorizes the attorney general to bring an action to recover the civil penalty. SECTION 2. Effective date: September 1, 1999. SECTION 3. Emergency clause.