Legislature(2017 - 2018)BARNES 124

02/28/2018 03:15 PM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved HB 341 Out of Committee
-- Public Testimony --
Heard & Held
-- Public Testimony --
Scheduled but Not Heard
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
              HB 350-AUTOMATED TELLER MACHINES: FEES                                                                        
3:25:08 PM                                                                                                                    
CHAIR KITO  announced that the  final order of business  would be                                                               
HOUSE BILL  NO. 350, "An Act  relating to certain fees  for using                                                               
an automated teller machine."                                                                                                   
3:25:37 PM                                                                                                                    
REPRESENTATIVE ORTIZ, Alaska State  Legislature, presented HB 350                                                               
as  prime   sponsor.    He  paraphrased   the  sponsor  statement                                                               
[included in  committee packet] which reads  as follows [original                                                               
punctuation provided]:                                                                                                          
     The intent  of this bill  is to allow  retail automatic                                                                    
     teller  machines (ATMs)  to charge  a  withdraw fee  on                                                                    
     transactions made by international bank card holders.                                                                      
     Currently,   there   is   no  legal   requirement   for                                                                    
     independently   owned  ATMs   to   charge   a  fee   on                                                                    
     transactions  made by  international card  holders. Our                                                                    
     current  law  only pertains  to  ATMs  owned by  state-                                                                    
     sponsored banks or credit unions,  and does not include                                                                    
     retail  and individually  owned ATMs.  Because of  this                                                                    
     gap,  retail  ATMs  cannot charge  a  withdraw  fee  on                                                                    
     transactions  from bank  cards  outside  of the  United                                                                    
     Alaska welcomes millions of visitors  each year, with a                                                                    
     large  percentage of  those visitors  from  out of  the                                                                    
     country. In  the summer of  2016 alone,  nearly 300,000                                                                    
     international  visitors  came  to  Alaska.  Retail  ATM                                                                    
     owners   cannot   charge   fees  on   these   tourists'                                                                    
     transactions. Often, in order to  make up for that lost                                                                    
     revenue, they increase  their fee for those  who do pay                                                                    
     the surcharge  fee, which leads to  domestic card users                                                                    
     paying a higher fee than international card users.                                                                         
     Multiple  other state's  have  already  passed laws  to                                                                    
     close this gap and allow  retail ATM owners to charge a                                                                    
     transaction fee to international card holders.                                                                             
REPRESENTATIVE  ORTIZ stated  that  the committee  has a  support                                                               
letter  from  the National  ATM  Council  and  that there  is  no                                                               
opposition from  the local sponsored  banks like Wells  Fargo and                                                               
similar institutions.                                                                                                           
3:27:39 PM                                                                                                                    
REPRESENTATIVE KNOPP  referenced a line in  the sponsor statement                                                               
regarding the  lack of a  requirement to  charge a fee  and asked                                                               
whether there is a prohibition currently against [the fee].                                                                     
REPRESENTATIVE  ORTIZ shared  his understanding  that single  ATM                                                               
owners that are  not affiliated with banks cannot  charge fees to                                                               
international card holders.                                                                                                     
REPRESENTATIVE KNOPP surmised  that when the law  was created, it                                                               
stated a state-sponsored credit union  ATM is okay but retail and                                                               
private  ATMs are  not.   He asked  why the  law would  have been                                                               
crafted in a such a way.                                                                                                        
REPRESENTATIVE ORTIZ deferred to his  staff, Ms. Hamp, to address                                                               
the question.                                                                                                                   
3:29:07 PM                                                                                                                    
CAROLINE  HAMP, Staff,  Representative  Dan  Ortiz, Alaska  State                                                               
Legislature, answered  questions in the  hearing on HB 350.   She                                                               
stated that when  the statutes were written, retail  ATMs did not                                                               
exist.  She said the gap in the  law was not meant to harm future                                                               
endeavors for retail ATMs.                                                                                                      
3:29:33 PM                                                                                                                    
REPRESENTATIVE  BIRCH  asked  if   ATM  owners  could  reject  an                                                               
international card.  He gave an example  of an ATM found at a bar                                                               
or grocery store.                                                                                                               
3:30:22 PM                                                                                                                    
REPRESENTATIVE  ORTIZ  asked  whether  Representative  Birch  was                                                               
asking if it  is within the rights  of a bar owner  not to accept                                                               
the card.                                                                                                                       
REPRESENTATIVE BIRCH stated  that if a customer didn't  pay for a                                                               
service,  then  the business  could  reserve  the right  to  deny                                                               
REPRESENTATIVE ORTIZ  suggested that would force  the customer in                                                               
the bar  to find another  location.   He added that  the proposed                                                               
bill would allow  that bar owner to profit  from an international                                                               
visitor that might want to use their card in his bar.                                                                           
3:31:52 PM                                                                                                                    
REPRESENTATIVE WOOL  declared a  conflict of interest  because he                                                               
owns a  private ATM.   He shared experiences with  customers that                                                               
used his ATM  and stated he did  not know what kind  of card they                                                               
used  and whether  they got  processed or  not.   He said  if the                                                               
international cards are  getting rejected, he would  like that to                                                               
change and if  they aren't getting charged he'd like  them to get                                                               
REPRESENTATIVE ORTIZ stated  he appreciated Representative Wool's                                                               
3:33:15 PM                                                                                                                    
REPRESENTATIVE SULLIVAN-LEONARD  suggested that  an international                                                               
tourist  visiting Alaska  would  be charged  the transaction  and                                                               
would also be charged a fee from their bank.                                                                                    
REPRESENTATIVE  ORTIZ opined  that a  seasoned traveler  would be                                                               
aware of  bank charges.   He said when  he travels he  knows that                                                               
there is a charge that goes  to the individual owner and a charge                                                               
that goes  to the bank. He  stated travelers don't have  to use a                                                               
particular bank machine and can go to another location.                                                                         
REPRESENTATIVE SULLIVAN-LEONARD stated it  would be a convenience                                                               
aspect that  any business that  has a  private ATM would  want to                                                               
bestow upon  anyone visiting that  establishment.  She  asked how                                                               
many states already have similar legislation in place.                                                                          
Ms. HAMP stated they had heard  from the National Council of ATMs                                                               
that Alaska is the last state to have the gap.                                                                                  
REPRESENTATIVE ORTIZ  pointed to a  letter from the  National ATM                                                               
Council  stating, "To  our knowledge,  Alaska is  the only  state                                                               
left with this unintentional restriction in it's state law."                                                                    
3:36:55 PM                                                                                                                    
CHAIR KITO asked  whether there are restrictions  in either state                                                               
or federal law that prohibit this action.                                                                                       
KRISTY  NAYLOR,   Acting  Director,   Division  of   Banking  and                                                               
Securities,  Department   of  Commerce,  Community,   &  Economic                                                               
Development (DCCED),  testified during the discussion  of HB 350.                                                               
She said the division hasn't been  able to find anything in state                                                               
law that  prohibits this type  of fee  being charged.   She added                                                               
that  the proposed  bill  would  be part  of  Title  6 which  the                                                               
division oversees,  and the division  only has  jurisdiction over                                                               
state-chartered financial  institutions such as banks  and credit                                                               
unions.     She  stated  it   doesn't  extend  over   to  federal                                                               
institutions such  as Wells  Fargo or  federal credit  unions, it                                                               
wouldn't extend over private ATM owners or private citizens.                                                                    
CHAIR KITO asked  for clarification that the state  rules are not                                                               
in a position to provide any  regulations over a private ATM or a                                                               
federal banking institution.                                                                                                    
MS. NAYLOR answered those facilities  are not in the banking code                                                               
and that the  state doesn't have jurisdiction  over federal banks                                                               
or private citizens.                                                                                                            
3:38:27 PM                                                                                                                    
REPRESENTATIVE  SULLIVAN-LEONARD asked  if the  legislature would                                                               
want  to  put  restrictions  around   the  proposed  bill.    She                                                               
suggested a tourist using an  international card at a private ATM                                                               
shouldn't be charged 20 dollars per transaction.                                                                                
MS.  NAYLOR  said  state  law  on  state  financial  institutions                                                               
briefly addresses ATMs.   She stated that there  are statutes for                                                               
credit  unions  and banks,  but  the  language does  not  address                                                               
whether a  fee should be  one dollar or  ten dollars.   She added                                                               
restrictions  would require  the state  to oversee  that type  of                                                               
program and  keep track of all  ATMs and related fees.   It would                                                               
be a new oversight the department does not currently have.                                                                      
3:40:10 PM                                                                                                                    
REPRESENTATIVE  ORTIZ  stated  it  would be  an  issue  that  the                                                               
legislature could trust  the market to manage.    He suggested if                                                               
the fee has  to be disclosed, cardholders are  going to recognize                                                               
the price is a lot higher  than they would normally pay and could                                                               
use another machine with a lower fee.                                                                                           
3:40:52 PM                                                                                                                    
CHAIR KITO said he has used  private ATMs where he was not within                                                               
walking  distance of  another  ATM that  may  have charged  lower                                                               
3:41:18 PM                                                                                                                    
REPRESENTATIVE WOOL  surmised there is a  standard fee regardless                                                               
of whether the card is foreign or  domestic.  He said he does not                                                               
think there is a different fee schedule.                                                                                        
3:42:11 PM                                                                                                                    
REPRESENTATIVE JOSEPHSON  stated that if there  is no difference,                                                               
it suggests that  the state is not currently  complying with some                                                               
3:42:33 PM                                                                                                                    
REPRESENTATIVE ORTIZ stated that this  issue was brought forth by                                                               
a  constituent who  is  an individual  ATM owner.    He had  been                                                               
informed that on international transactions  there is no fee that                                                               
they can  collect.   He added that  if an  international traveler                                                               
goes into  a Wells Fargo  they do pay  a fee.   Individual owners                                                               
are losing out on fees they could have collected.                                                                               
REPRESENTATIVE  JOSEPHSON  stated  the  fiscal  note  says,  "The                                                               
Division of  Banking and Securities  does not  currently regulate                                                               
ATM fees." He asked who regulates ATM fees.                                                                                     
REPRESENTATIVE ORTIZ deferred to Ms. Naylor.                                                                                    
3:44:17 PM                                                                                                                    
CHAIR KITO reiterated Representative Josephson's question.                                                                      
MS. NAYLOR stated  there may be federal law that  pertains to the                                                               
state banks as  well as the federal banks, but  as far as private                                                               
citizens  are  concerned,  she  is  not  aware  of  anybody  that                                                               
regulates them.                                                                                                                 
REPRESENTATIVE JOSEPHSON  surmised that  the cardholder  would go                                                               
to the business owner in the event of an issue with the ATM.                                                                    
MS. NAYLOR stated that would be her assumption as well.                                                                         
REPRESENTATIVE KNOPP stated that he  reached out to a friend that                                                               
owns a  private ATM  who had  said he doesn't  see any  card that                                                               
goes into  the machine  and he  think that there  is a  fee being                                                               
assess but  not sure if  it's being paid.   He asked  whether the                                                               
processing center  would be  the only party  to know  whether the                                                               
card is international.                                                                                                          
3:46:11 PM                                                                                                                    
REPRESENTATIVE WOOL  shared his experience  with an ATM  he owns.                                                               
The customers are charged a fee, and  at the end of the month, he                                                               
receives  checks from  the processing  company on  the number  of                                                               
transactions. He said  he doesn't know which  bank the cardholder                                                               
used; the  transactions aren't  itemized.   He surmised  there is                                                               
probably a report  he could print out  but as far as  he knows he                                                               
gets a flat  fee for each transaction.   He suggested cardholders                                                               
are  getting charged  twice; once  by the  ATM owner  and another                                                               
time by the bank.                                                                                                               
3:47:13 PM                                                                                                                    
CHAIR  KITO opened  public testimony  on HB  350.   He stated  he                                                               
would leave public testimony open.                                                                                              
CHAIR KITO held over HB 350.                                                                                                    

Document Name Date/Time Subjects
HB350 Sectional Analysis ver A 2.19.18.pdf HL&C 2/28/2018 3:15:00 PM
HB 350
HB350 Sponsor Statement 2.19.18.pdf HL&C 2/28/2018 3:15:00 PM
HB 350
HB350 ver A 2.19.18.PDF HL&C 2/28/2018 3:15:00 PM
HB 350
HB350 Fiscal Note DCCED-DBS 2.23.18.pdf HL&C 2/28/2018 3:15:00 PM
HB 350
HB277 Supporting Document-Fast Facts for Conservatives on Net Neutrality 2.12.18.pdf HL&C 2/28/2018 3:15:00 PM
HB 277
HB277 Opposition Documents 2.13.18.pdf HL&C 2/28/2018 3:15:00 PM
HB 277
HB277 Opposition Letters 2.17.18.pdf HL&C 2/28/2018 3:15:00 PM
HB 277
HB277 Supporting Documents-Letters of Support 2.9.18.pdf HL&C 2/28/2018 3:15:00 PM
HB 277
HB277 Opposition Documents 2.13.18.pdf HL&C 2/28/2018 3:15:00 PM
HB 277
HB350 Fiscal Note DCCED-DBS 2.23.18.pdf HL&C 2/28/2018 3:15:00 PM
HB 350
HB350 Sponsor Statement 2.19.18.pdf HL&C 2/28/2018 3:15:00 PM
HB 350
HB350 Support Letters 2.27.18.pdf HL&C 2/28/2018 3:15:00 PM
HB 350