ATMIA: Texas ATM human trafficking bill 'based on false premise'

Last week, ATM Marketplace published a story on a proposed Texas law that would require state registration for non-bank owned ATMs. This law was meant to combat ATM usage by operations that participate in human trafficking such as certain massage parlors and cantinas.

Children At Risk, a human-trafficking advocacy organization, is currently advocating for this bill's passage. Caroline Roberts, a staff attorney for Children at Risk, said this law is not meant to restrict ATMs, but rather to combat bad actors.

The bill would require the name of the operator and the business to help identity who is specifically involved with the ATM — since many times the actual owner of the ATM may not be involved with the crime. In order to register the ATM, the operator would need to pay a fee that is capped at $200 per year, regardless of how many ATMs the operator owns.

However, this law is controversial, as some leaders in the ATM industry believe it would do more harm than good. ATM Marketplace spoke with David N. Tente, executive director of USA, Canada and the Americas, the ATM Industry Association to get his take on the situation.

Q.What are ATM laws currently like in Texas?

A.There are very few states that require licensing or registration of non-bank ATMs, because it is not necessary. Independently operated ATMs are heavily regulated by the ATM networks and card brands — as are the bank operators. They also need to be sponsored into the ATM card networks by a bank. We are not aware of any Texas laws regulating non-bank ATMs.

Q.What does House Bill 2629 add to that?

A.It is my understanding from their staff that Children At Risk wrote HB 2629. It would appear someone they trust as a reliable source has informed them that independent ATM deployers are not subject to any vetting, oversight or compliance requirements. And that non-bank ATMs can be operated anonymously by anyone, which I assume is why they refer to them as "private" or "white label" ATMs. I have explained to them that this is incorrect and even provided an infographic we published a few years ago that details the vetting process and cash flow cycles for non-bank ATMs. They either rejected or ignored this information.

The primary premise of HB2629 is that law enforcement does not have the information necessary to identify bad actors or business owners who are operating ATMs. This premise is completely false. The information that is required by the proposed registration regime in HB2629 is already available to law enforcement. Therefore, this bill accomplishes nothing but to burden independent operators and disrupt cash access for consumers.

HB2629 would require 30 days notice prior to moving any registered ATM. When the next hurricane or other natural disaster strikes, there would be a 30-day delay in getting mobile ATMs out to where they are needed. ATMs get moved frequently and for many reasons.

HB2629 requires copies of all contracts between the merchants and operators. These are private documents detailing surcharge information, payments, rents, revenue splits and so forth. This requirement poses significant legal issues surrounding privacy and probable cause and would almost certainly be challenged in the courts if the provision survived.

Children at Risk is targeting what they claim are 900 illicit massage parlors in Texas. Their bill will negatively impact an estimated 16,000 ATM terminals in Texas and their operators. Their efforts should be targeting the businesses which are suspect and not the providers of ATMs or other retail cash services. The processes that would be created are extraordinarily burdensome and costly in the form of paperwork and administration.

The cause is laudable, but the premise for this bill is completely false and misleading, and wrongly punishes the operators of more than 15,000 ATMs in Texas.

Q. What are some ways the ATM industry can fight bad actors like human trafficking operations that utilize ATMs?

A.ATM operators willingly cooperate with law enforcement in their investigations of any illicit activity involving one of their ATMs. In addition, ATMIA requires proper ethics on the part of its members and also works closely with the FBI, Secret Service, local law enforcement and Interpol.