Question

CASE 15 EXERCISING YOUR ETHICS: INDIVIDUAL EXERCISE TELLING THE ETHICAL FROM THESTRICTLY LEGAL The Situation When upgrading services for convenience to customers, commercial banks are concerned about setting prices that cover all costs so that, ultimately, they make a profit. This exercise challenges you to evaluate one banking service- ATM transactions-to determine if any ethical issues also should be considered in a bank's pricing decisions The Dilemma A regional commercial bank in the western United States has more than 300 ATMs serving the nearly 400,000 checking and savings accounts of its customers Customers are not charged a fee for their 30 million ATM transactions each year, as long as they use their bank's ATMs. For issuing cash to noncustomers, however, the bank charges a $2 ATM fee. The bank's officers are reexamining their policies on ATM surcharges because of public protests against other banks with similar surcharges in Santa Monica, New York City, and Chicago. lowa has gone even further, becoming the first state to pass legislation that bans national banks from charging ATM fees for noncustomers. To date, the courts have ruled that the access fees are legal, but some organizations -such as the U.S. Public Interest Research Group (PIRG) continue to fight publicly against them. In considering its current policies, our western bank's vice president for community relations is concerned about more than mere legalities. She wants to ensure that her

Answer 1

1. The economic justification to the fees charged for access to ATM is that the commercial banks are operating to generate money and earn profits. They provide services to the customers for which they charge some amount. The customers who have their money in banks are benefitting the banks by keeping their funds in the banks for long term basis, accumulating the amounts through the different banking methods and sustaining their financial position. Hence the banks are able to derive profits from the customers who have their accounts with them. But the noncustomers are ones who do not hold accounts in the banks and have access to the ATM machines to withdraw amounts from their accounts in other banks. As the commercial banks are providing this service to make the process of withdrawing money easy and quick from any ATM at any location, it is justified for them to charge a fee for it. It is a fee charged by the banks to the noncustomers for a service the take as customers. A commercial bank does not need to provide that service to them free of cost.

2. In this scenario, ethical issues can arise if the bank is charging unduly higher than the other banks as a fee to access the ATM or charging a fee of which the customer is unaware. A fixed appropriate amount charged from the noncustomers of the bank for the facility provided to them by a bank which does not hold their account is not ethical. It can be considered for alterations on legal and economic grounds but not ethical grounds.

3. As an officer of the bank, I would do what would be in the interest of all to some point, the bank, the customers and the market. I would fix an amount to noncustomers for accessing the bank ATM but not for every transaction. I would fix a certain maximum limit up to which the ATM can be used freely. Only after which the fees would be charged. I would make this decision after understanding the customers' and other bankers' reviews on it. I would also make sure that this policy is aligned with the legal policies of the place and it brings profits to the bank.