NYC, ATM groups debate ATM security

The New York City Council’s recommended guidelines for nonbank ATMs drew criticism from the ATM community. A proposed ordinance, introduced Dec. 15, 2016, seeks to regulate placement and surveillance of retail ATMs. The rules and regulations, if passed, would impose strict penalties on noncompliant ATM owners, deployers and merchants, analysts stated.

The Council’s Committee on Consumer Affairs held a hearing Jan. 12, 2017, to review the ATM bill, known as Int. 1406-2016. Leaders from the National ATM Council Inc. and ATM Industry Association Inc. participated in the hearing and recommended all affected parties work together to modify the guidelines.

"The National ATM Council shares New York City’s goal of ensuring top-notch safety and security for NYC consumers of retail ATM services," stated Bruce Wayne Renard, NAC Executive Director, in an interview with The Green Sheet. "The reality is that retail ATMs are already safer for consumers to use, with live attendants and patrons present, versus the unattended outdoor ATMs found at most bank locations."

Mike Keller, Co-Chair of ATMIA’s Government Relations Committee (GRC) and Special Counsel for Cardtronics Inc., also testified at the public hearing. Keller observed a similar situation in Ohio involving the Cleveland City Council’s proposed regulations for cash replenishment in ATMs. The regulation could lead to "widespread out-of-cash conditions in city ATMs," ATMIA stated.

Definitions, guidance

The seven-part measure seeks to amend the administrative code of New York City by requiring additional security measures at nonbank ATMs, the city's consumer affairs committee stated. The proposed additions would be incorporated in a new sub-chapter under the following headings:

• Definitions
• Placement agreement
• Security measures
• Exemptions
• Banking regulations
• Penalties
• Rules and regulations

"This local law takes effect 120 days after enactment, except that the commissioner may take any action necessary for the implementation of this local law, including the promulgation of rules, prior to that date," the committee wrote.

Consumer safety, access

Renard said creating a new regulatory regime for retail ATMs in New York City would be costly and burdensome. He added that the measure would not enhance security and might even lead to higher fees and fewer retail ATMs for consumers. "NAC has offered to work with NYC to develop a stringent new criminal penalty and enforcement regime directed at all ATM-related crimes," he said. "Experience shows this to be the most effective deterrent of all."

Renard urged the New York Council and Committee to recognize the consumer benefits of retail ATMs. He noted that nonbank ATMs are registered with sponsor banks that thoroughly vet all prospective ATM providers prior to placement. These ATMs often serve areas outside the footprints of traditional financial institutions, which include public locales and underbanked communities, he stated.

Flexible framework

In his statement to the New York Council Committee of Consumer Affairs, Renard emphasized the need for a flexible legislative framework that could adapt to rapidly changing technology.

Each ATM placement is unique to the specific location in terms of ideal placement, employee and public access, and overall security considerations, Renard stated. "The Committee should also note that security ‘best practices’ change continually, depending on the nature/level of local criminal activity and the ongoing evolution of security technology for retail ATMs designed to meet constantly evolving threats," he wrote. "Given the pace of technological change in this sector alone, it is highly impractical and unwise to attempt to legislate and bind ATM owners and operators to current security measures which are likely to become technologically outdated or even counterproductive in very short order."

Renard cited the following additional shortcomings of the proposed measure:

• Too generic: A one-size-fits-all approach fails to adequately address the diversity of real-world ATM locations and circumstances.

• Regulatory overkill: Multiple regulatory schemes for each municipal local jurisdiction will place administrative and financial burdens on ATM stakeholders.

• State presumption: Numerous security protections have already been addressed in the 2016 ATM Safety Act adopted by the New York State legislature.

• Federal presumption: The proposed ordinance interferes with interstate commerce by conflicting with applicable federal law and regulations governing the ATM business.

• Equal protection: The ordinance is discriminatory by targeting bank-sponsored ATMs instead of treating all off-bank-premise ATMs equally. “The basic premise of the ordinance that there are nonbank ATMs is factually incorrect and is an unsound foundation upon which to proceed,” Renard stated.

• Violates Contracts Clause of U.S. Constitution: Specific language in the proposed ordinance unfairly interferes with private party contractual rights guaranteed under the United States Constitution.

"For all these reasons, The National ATM Council Inc. respectfully requests that Int. 1406-2016 be tabled at this time, and that the Committee work with NAC and other interested parties to develop appropriate revisions to the penal code and enforcement protocols that will actually help deter ATM related crimes and protect New York’s consumers of ATM services," Renard wrote.

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