In a recent Article posted by CNNMoney called Breaking the Bank, ATM Fees, Jessica Dickler discusses the recent move by Bank of America’s decision to raise Non-customer atm bank fees to $3 per transaction.

Bank Of America claims they are doing this to “improve access and convenience for its account holders using ATMs at its branches – reducing traffic to cash machines” as noted by Betty Reese (Bank of America’s Public Relations). I believe that is a complete bold face lie. Bank of America owns and operates the largest ATM network in the US. An extra $1 fee will result in millions of extra revenue generated by non-BOA customers. This is really the perfect fee hike. You only affect you non-customers. It is a brilliant move by the largest consumer bank.

So does this mean consumers are getting ripped off? Should the government step in? Is it fair? These are questions that certainly surround the issue.

While I believe that the fees are bogus for large institutions due to economy of scales, they do run a for profit corporation and this does generate more than 4.2-Billion per year in collected ATM fees in the banking industry.

It is fascinating to read the responses to the story above regarding this. You see everything from BOA being called a criminal to people saying shut your mouth and get a life. I think in some sense every person commenting is right on both sides of the argument! The beauty of a free market is that if corporations are perceived to be gouging customers, new suppliers will slowly develop and mature that offer the shortfall of the main supplier.

For this to happens, however, people need to complain and call out for better prices when profits exceed reasonable expectations. It is completely reasonable for people to complain about a $3 fee, if you don’t and just take it because you believe it is the corporations right to charge you than you are naive of your power to be customer ( please send me $10 for reading this post if you are one of these people.  I have costs I need to cover!). In an industry that is highly profitable, it is fair to ask for better service and lower fees.

So why don’t people highly criticize Starbucks? They are highly profitable and $4 for a cup of coffee is most certainly a consumer gouge. It is a brand. Plain and simple. If you want cheap coffee you can go to you local gas station. You pay to be part of the Starbucks branding and concede to the $4 cup of coffee.

For BOA and Many other large banking institutions that have ATMs, consumers have little choice. As a result, you get complaints and from that new competitors in the market. There are now great alternatives to the large banks that offer much lower fees, better customer service, and better dispute resolution. Such examples are interest checking at Charles Schwab. Fidelity and TDwaterhouse (all brokerage firms).  If no one complained and accepted that the corporation has a right to make money and huge profits, then perhaps we would be paying $10 or $20 per transaction today.

Point is, when companies gouge consumers that have no other options for services that are needed, the only change will come from consumer action to force new competition. When new competition comes in, prices will decrease. Simple economics.

As far as government intervention, most of the time not a good idea. Look at the telecom industry. One of the best examples of how government can really make something messy.

What are your thoughts? Should we complain as consumers? Should the government intervene?