n 1999, the California cities of Santa Monica and San Francisco approved bans on ATM surcharges. They were joined by Woodbridge, N.J., in 2000. Legal challenges, however, restored surcharging in all three cities. The California cities took their court battle all the way to the Supreme Court, which in May 2003 refused to hear their appeals of a district court decision that had overturned surcharge bans.

Detroit is trying to become the latest municipality to pass a regulation that could have far-ranging repercussions for ATM owners on a state, and possibly federal, level.

Detroit's Proposal for ATM Safety

Detroit Council President Pro Tem Kenneth Cockrel Jr. in July introduced an amendment of existing city code that would require installation of surveillance cameras and card-activated emergency notification systems at exterior ATMs in the city. While the amendment would not exempt non-bank owned ATMs, most of those machines are located inside retail businesses.

The amendment received its first public hearing on July 29. Cockrel Jr. hopes to bring it to a vote when the Council reconvenes next month, said John Clark, the councilman's Chief of Staff. While there was some pushback from financial institutions, Clark said, Cockrel Jr. "would prefer to get as much buy-in as possible from the industry." He has initiated discussions with some financial institutions to review the proposed six-month implementation timeframe, among other issues. "We want to hear their concerns and make sure we're not moving too fast."

The amendment could have positive benefits for FIs, Clark said. Implementing alert systems "can help them be better corporate citizens" and might encourage increased ATM usage. "I'm sure there are people who avoid using ATMs after dark. With an alert system, they're going to feel more secure."

Cockrel Jr. hopes the amendment will help deter crime. According to police department statistics, Detroit had 910 reported shootings in the first eight months of 2004, 23% over the same period in 2003.

"When the economy goes down, crime goes up. We want to do anything we can to help prevent or deter crime," Clark said.

Hot Button Issue

The system being considered for Detroit alerts authorities when users hit a "911 button" at the machine. Clark said such buttons could be used for other incidents, such as medical emergencies, that occur near ATMs.

Larry Steelman, Vice President of North American Communications Corp., a Mississippi-based manufacturer of such systems, said his company has sold some 2,000 of its systems in 33 states and the District of Columbia, mostly to small community banks. The cost is typically $1,000 to $1,500. In some cases, one system can be used for up to three machines at a single location.

The 911 button typically does not function until an ATM card is inserted into the machine, Steelman said, which reduces the possibility of false alarms. When communication is initiated with a local 911 dispatcher, the dispatcher "can hear everything within approximately 20 feet or so of the ATM and can dispatch appropriate personnel."

The system can also be set to have the button remain "alive" for a pre-determined time after the card is removed, thereby giving the customer the appropriate time to leave the ATM, Steelman said.

"Considering the amount of money financial institutions invest in internal security like dye packs, bulletproof glass, closed-circuit television and silent alarms, it should be nothing for banks to protect those of us who patronize their ATMs," Steelman said. "We understand that a bank must do what it can to protect its own assets, but we feel that protecting people as they use ATMs should be an important part of their security investment as well."

On the State Level

State efforts to introduce legislation similar to Detroit's have thus far been largely unsuccessful, with opponents citing the expense and ineffectiveness of emergency alert systems. Among states currently considering requiring the systems at ATMs are Kansas and New York.

In New York, efforts to require the systems date back to 1997, said a spokesperson for Rep. Catherine Nolan (D-Queens). Nolan is a cosponsor of Assembly Bill 4571, which would require banks operating ATMs to equip them with emergency access systems. The bill passed the Assembly in June 2003 but died in the Senate last January.

The bill could get a new hearing later this year, the spokesperson said.

The bank lobby has raised the specter of federal preemption, the issue that scotched the surcharge bans. While relevant for rules relating to interstate commerce, such as ATM fees, that issue shouldn't apply to emergency alert systems.

"Local law enforcement regards (ATM safety) as a state issue," she said. "If localities feel that special measures are needed to answer the needs of their communities, especially regarding crime and safety, federal preemption does not apply."

Double Bill

In Kansas, state Sen. Phil Journey (R-Haysville) has introduced two bills, one (Senate Bill 333) that would require the installation of emergency alert systems at ATMs and another (Senate Bill 438) that would make ATM robbery a felony offense that would result in stiffer penalties than those usually imposed.

Both died in committee earlier this year, Journey said, but he intends to re-introduce them. "It can take years to get bills passed. It's just a matter of educating your colleagues and introducing more and more information to support them."

Journey's bill called for the adoption of an alert system designed to send an alarm to local law enforcement agencies when an ATM user enters his PIN in reverse order. Journey said he felt the reverse-PIN technology, patented by Joseph Zingher of Chicago in 1999, offered several advantages over systems in which users hit a "911 button" at ATMs.

Journey doesn't feel the "911 button" would help in cases where victims are abducted, taken to ATMs and forced to withdraw cash at gunpoint. In one such high-profile case in Wichita, Kan., two brothers abducted five people from a townhouse in December of 2000, terrorized them for several hours and forced them to withdraw money from ATMs before shooting all five in the head. Only one victim survived.

Eight days before the murders, one of the brothers had abducted another victim and forced him to withdraw money from an ATM before releasing him unharmed.

With reverse-PIN, Journey said ATM users could also freely write their PINs on their ATM cards. "How many people write their PINs on their cards? Too many. But if they wrote them backwards, what would happen if someone stole their card and tried to use it?" he asked. "Officer Friendly would show up and say 'Could I see some ID?'"

A criminal attorney and former member of the National Rifle Association's board of directors, Journey said, "There's one thing I know about criminals: they're lazy. Once a system like this is introduced and publicized, crime rates will drop. Criminals will switch to something less risky."

Zingher, creator of the reverse-PIN system, said the system would cost only about $25 per ATM to implement, since it is a software fix with no hardware modifications required. Other methods are used for customers with PINs such as 2002 (an "inside-out PIN" of 0220) or 1111 (a "PIN plus one" of 2222). Mistakes are nearly impossible, Zingher said, because all four digits would have to be entered incorrectly to summon authorities.

The reverse-PIN system "could ultimately be more dangerous for the consumer," said Kathy Olsen, Associate General Counsel of the Kansas Bankers Association. "Remembering their PIN is enough of a challenge for most people, much less trying to remember it backwards with a gun at their head."

If authorities arrived in the midst of a robbery, it's possible the criminal would be more likely to harm the victim or take him hostage, Olsen added. Journey believes FIs are less concerned about customer safety than they are about possible liability. "Once something becomes a community standard, doing anything less opens you up to lawsuits," he said.

Tough to Track

Like Journey, Zingher believes FIs fear potential litigation. He said that FIs have for years tried to hide the true extent of ATM crime. Journey's Senate Bill 438, requiring a separate classification for ATM crime, "would end all dispute whether systems like mine are needed."

Deke Hager, a correctional counselor with the Indiana Department of Corrections, discovered how difficult it was to determine the scope of ATM crime when he tackled a project to do so while writing his master's thesis as a criminal justice student.

"It's very nearly impossible" to gauge the frequency of ATM crime, Hager said, largely because no enforcement agencies segregate ATM crime into a single category; instead it is "hidden" in larger categories of robbery, kidnapping, assault and carjacking.

Using statistics from the Indianapolis police department, Hager sifted through some 59,000 crimes that occurred from January of 1999 to June of 2003. Using mapping software, he created "zones" of 100 feet around ATMs to try to determine how many robberies had occurred near the machines. He eliminated irrelevant categories of crime, such as commercial robberies.

Hager said he concluded that about 800 robberies took place within 100 feet of ATMs, a figure "startlingly close" to the 1% of all robberies that the banking industry itself reports for ATM crimes.

"It's hard to quantify cases where someone has been abducted and taken to ATMs to withdraw money or where people have withdrawn money and been robbed while walking down the street afterward," Hager said. "But in cases where someone walks up to an ATM and is robbed right before, during or after a transaction, the numbers (the banking industry) report appear to be pretty accurate."

Zingher contends that Hager's data are flawed because he believes Indianapolis has more than 128 ATMs, the number of machines in Hager's study. Consulting the Yellow Pages, Zingher said he discovered almost 500 bank branches, most of which he assumes have ATMs.

Hager used banks' ATM locators and believes his ATM number is reasonably accurate. However, "there is no central registry" listing the machines, which made it difficult to identify ATM locations, he acknowledged.

Journey said the overall number of crimes is less important than the heinous nature of many ATM thefts. "You tend to have a lot more violence in cases where thieves are trying to coerce PINs out of people, and multiple crimes are often committed."

Zingher's system is also mentioned in an amendment to Illinois' Electronic Fund Transfer Act. Adopted in 2003, the amendment reads that ATMs in Illinois "may be designed and programmed so that when a consumer enters his or her personal identification number in reverse order, the terminal automatically sends an alarm to the local law enforcement agency having jurisdiction over the terminal location."

Joyce Nardulli, Vice President of Government Relations for the Illinois Bankers Association, said, "It was important to make the law permissive. It has to be up to the banks to decide" whether they want to install an alert system.

New Product

Despite the struggles to mandate emergency alert systems, at least one new entrant is entering the field. Ron Russikoff, President of Philadelphia's ATMB-Safe, said his company hopes to attract the interest of EFT networks with its system, which will involve users answering a question displayed onscreen during a transaction to indicate whether they need help.

"The ATM will actually ask if you're in danger. It will be camouflaged as another type of question, but users will be able to get help if they need it," said Russikoff, who plans a public launch of his system at the ATM Industry Association's "ATM Sec 4" conference Oct. 25 - 26 in London. He can't release more specific details of his system while it's being considered by the U.S. Patent and Trademark Office.

Russikoff said his system will work better than asking customers to remember a variation of their PINs while under duress. "That seems to be one of the primary objections to the reverse PIN, that it's too hard to remember."

Russikoff is still developing pricing models for his product but said that keeping the cost low is a goal.

According to an Associated Press report, IBM received a patent earlier this year for a "duress PIN" system. However, IBM, whose patent cites Zingher's invention, says it has no immediate plans to use the technology.

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