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Justice Officials to Probe Some Practices in Bank Industry : Consumers: Investigation into service fees is triggered by advocate groups' allegations of antitrust violations.


The Justice Department said Wednesday that it is looking into allegations by consumer groups that banks are violating federal antitrust laws when they set fees for bounced checks, automated teller machines and other services.

The probe was apparently triggered by a request from the Consumer Federation of America and the U.S. Public Interest Research Group, two watchdog groups that claim such fees vary little from one institution to the next.

Justice Department spokeswoman Gina Talamona would say only that the agency is conducting an investigation into "certain practices in the banking industry." She said the department does not comment on ongoing cases.

However, in a recent letter to the two advocacy groups, antitrust division chief Anne Bingaman said the Justice Department took the groups' charges seriously and is "looking into them."

Michael Crotty, a top lawyer for the American Bankers Assn., said his trade group is unaware of any ongoing Justice Department investigation of the industry.

But Crotty called charges that banks are violating antitrust laws "absolutely false" and said it would be impossible to get every financial institution in the nation to set uniform prices for their services.

"There are more than 10,000 banks across the country plus thousands more thrifts and credit unions," Crotty said. "Consumers know that if they don't like their bank's services or fees, there are plenty of other places where they can go."

A full-scale investigation by the department would be a coup for consumer advocates, who say that regulators and lawmakers have largely ignored their complaints that banks are gouging their customers and may be breaking antitrust laws.

"We're tired of being ignored, and we're glad that somebody in Washington finally seems to be listening," said Jon Goldinger, who has been researching consumer banking issues in the Los Angeles office of the California Public Interest Research Group.

In a June 22 letter to the Justice Department requesting an antitrust investigation, the consumer groups said that prices for a variety of typical bank services "seem to appear in lock step across the industry and across the nation."

The groups also said that banking trade groups regularly sponsor conferences where bankers "gather to share pricing information and strategies," which could discourage industrywide competition.

The consumer groups say they have other evidence that supports their charges of price gouging and indicate possible antitrust violations.

For example, they say, about 85% of all banks now charge customers a fee of about $5 when they unwittingly deposit a bad check to their account, up from just 35% three years ago. Those fees will generate more than $1 billion for banks this year alone, the groups say.

More than 82% of banks now charge customers for using their cards at another bank's ATM, up from 67% in 1989. The typical charge is $1, the groups said.

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