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Do the ATM advertising restrictions in the Illinois Electronic Fund Transfer Act (EFTA) apply to nationally chartered banks? We have seen a few national banks advertise their products and services on the home screen of their ATMs, which is visible to non-customers.

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In our view, the advertising restrictions in the Illinois EFTA do not apply to national banks.

The Illinois EFTA prohibits advertising to non-customers on ATM terminal screens, and this prohibition applies to banks “established under the laws of the United States.”

However, a federal court of appeals (outside of Illinois) has determined that state laws that restrict ATM advertisements are preempted by the National Banking Act — which gives national banks all incidental powers necessary to carry on the business of banking, including advertising. Similarly, the U.S. Supreme Court has held that a national bank's incidental power to advertise for deposits conflicted with (and therefore preempted) a state law limiting such advertising. The OCC also has opined that certain state restrictions regarding ATMs (such as fee restrictions) do not apply to national banks. In addition, national banks are expressly permitted to make loans without regard to state advertising restrictions. Finally, unlike the Illinois EFTA, federal law does not prohibit banks from advertising to non-customers on ATM terminal screens. Taken together, these facts create a strong argument that the Illinois ATM advertising laws do not apply to national banks.

For resources related to our guidance, please see:

  • Illinois EFTA, 205 ILCS 616/50(d) (“When used to perform an interchange transaction, a terminal shall not bear any form of proprietary advertising of products and services not offered at the terminal; provided, however, that a terminal screen may bear proprietary advertising of products or services offered by a financial institution when a person uses an access device issued by that financial institution.”)
  • Illinois EFTA, 205 ILCS 616/10 (“‘Financial institution’ means a bank established under the laws of this or any other state or established under the laws of the United States . . .”)
  • Bank One, Utah v. Guttau, 190 F.3d 844, 850 (8th Cir. 1999) (“Bank One also challenges that provision of Iowa law which states that ATMs ‘shall not be used to advertise individual financial institutions or a group of financial institutions.’ Assuming that this section has any validity as against a national bank ATM . . . we conclude that it is preempted by the NBA.”)
  • National Bank Act, 12 USC 24 (A nationally chartered bank shall have the power “[t]o exercise by its board of directors or duly authorized officers or agents, subject to law, all such incidental powers as shall be necessary to carry on the business of banking . . .”)
  • Franklin National Bank v. New York, 347 U.S. 373 (1954) (The U.S. Supreme Court held that the incidental powers granted to national banks includes advertising, and that a national bank's incidental power to advertise for deposits preempts state law limiting such advertising.)