Iowa Banking Agency Suing Sears Over 7 In-Store Banc One ATMs

Banc One Corp.'s strategy of putting automated teller machines in Sears, Roebuck and Co. stores did not go over very well with Iowa officials. Iowa's superintendent of banking, Michael K. Guttau, is suing Sears over seven teller machines, claiming a number of violations of state law, including illegal fees. Although Columbus, Ohio-based Banc One is not named in the suit, which was filed Dec. 26 in Iowa District Court in Des Moines, its machines are at the heart of the controversy. The suit is the latest salvo in the nationwide debate over ATM surcharges, which has pitted consumer groups against bankers. Bankers say the fees cover the cost of providing convenient machines.

Last year Banc One installed more than 800 teller machines in Sears stores across the country. Each machine charges Banc One customers $1 and other banks' customers $1.50 for each transaction.

Iowa and Connecticut are the only states that prohibit banks from charging noncustomers for using their teller machines. "We have consumer- friendly regulations against fees," said Bob Brammer, a spokesman for the Iowa attorney general.

Banc One spokesman John Russell said he was unaware of any complaints outside of Iowa about Banc One's teller machines. Sears officials did not return calls.

The controversy began last September, when Iowa banking officials began receiving complaints about the machines, said Deputy Banking Superintendent Steven Moser. Neither Sears nor Banc One notified the Iowa agency about the machines, according to the suit, despite a law requiring machines to be approved by the state. Moreover, Banc One would not have been allowed to install machines because it does not have bank offices in Iowa, Mr. Moser said.