ATM&Debit News
New York State Comptroller Thomas P. DiNapoli has called for the state's Banking Department to make inspections of bank-owned automated teller machines, especially those in high-crime areas, a priority to comply with the ATM Safety Act.
The law, enacted in February of last year, requires that banks' ATM vestibules have adequate lighting, surveillance cameras, doors that can be unlocked only with magnetic stripe payment cards, and mirrors to help users see their surroundings. Banking Department employees are required to inspect ATM facilities, and banks must file yearly reports with the department proving compliance with the law.
Jacqueline McCormack, a spokeswoman for Banking Department Superintendent Richard H. Neiman, said the calls for inspections resulted from a routine audit and are not a response to any specific incidents. However, she also said that Mr. Neiman believes the law needs to be revisited, because major changes have occurred within the ATM industry.
For example, the department has "absolutely no idea" how many off-premises ATMs are deployed in New York, she said, and the law does not cover machines in off-premises locations, such as the lobby of an office building, a supermarket, or a drugstore.
The law does cover ATMs in bank-owned facilities that are available to customers during and after regular banking hours.
Mr. DiNapoli's office found enforcement of laws covering ATM facilities woefully lacking, according to an 18-page audit report published this month, "Oversight Of The ATM Safety Act."
For instance, the Banking Department did not have a ful list of ATMs covered by the law.
Inventories filed with the Banking Department indicate that there were 6,299 bank-owned ATMs in 3,784 locations statewide in April of last year, but the comptroller's own investigation raised doubts about the figures.
Mr. DiNapoli's office set out in May to inspect 51 randomly selected ATM locations, but banks provided data on only 35, the report said. "For 16 of these, banks provided ATM-inventory information that was not in agreement with the department's inventory records. Also, during 2006 we accompanied six inspectors on 89 inspections and observed ATMs at four bank locations that were not identified on the department's ATM inventory record."
The law requires banks to file an annual certification letter attesting to their safety of their ATM facilities with the Banking Department, but some banks do not file such letters, according to the report.
The Banking Department can fine banks up to $1,000 for every ATM facility not listed on a certification letter, and up to $5,000 for a false statement or an omission. If a bank does not correct a safety violation, the department can fine it up to $2,000 a day for each day the violation continues. However, Mr. DiNapoli's office found that the department rarely invokes this power to enforce compliance.
"The department has not used fines for the ATM-safety program since 1999," the report said.
Mr. Neiman said that his department would rather work with banks to gain their cooperation, though some fines may be necessary.
The report also said that the department "has not come close to its goal" of inspecting bank-owned ATM facilities, and that employees often do not follow proper procedures for the inspections, such as using a light meter to evaluate ATM facilities' exterior lighting.
The Banking Department has one full-time inspector for New York City and 12 part-time inspectors for the rest of the state, the report said. "For 2005, the Department of Banking fell far short of its inspection goal, completing just 4,286 inspections, 58% of its goal."
Ms. McCormack said the department inspected 71% of the state's 6,598 bank-owned ATMs in 2006.
The report also said the department does not notify banks of safety violations in a timely manner. Last year "the department was taking an average of 37 days to notify banks when safety violations were detected."
Mr. Neiman said that his department will start mailing violation notices to banks within 10 to 14 business days.
