Merchants File Two Lawsuits Over OCC and NCUA Handling of Illinois Interchange Law – Digital Transactions
Upset with actions taken by the Office of the Comptroller of the Currency and the National Credit Union Administration on the pending Illinois Interchange Fee Prohibition Act, a group of nine retail trade associations filed a pair of lawsuits against the federal agencies.
Delayed until July 1, the Illinois law would ban credit and debit card interchange assessments on sales and tips in Illinois. The IFPA was enacted in June 2024, but court actions, agency determinations, and legislative postponements have slowed its adoption, which was moved to 2027 earlier this year.
A court ruling in September expanded an existing injunction against the act to include national credit unions. National banks, federal savings and loans, out-of-state chartered banks, and card networks had previously been exempted by the injunction. State-chartered banks and credit unions remain subject to the act. Estimates indicate some 235 state-chartered banks and nearly 200 state-chartered credit unions operate in Illinois.
At that time, the Merchants Payments Coalition said the NCUA exceeded its authority. In April, the Office of the Comptroller of the Currency filed a notice about a rule to preempt the IFPA, Digital Transactions News reported.
In the duet of lawsuits filed Thursday, the trade associations allege that “nothing in the National Bank Act—or in the OCC’s poorly reasoned, slapdash rule—authorizes such collusive and excessive fees on merchants that have no banking relationship with the financial institutions charging those fees,” a National Retail Federation statement says.
The second lawsuit claims there is nothing in the Federal Credit Union Act that preempts the Illinois law and that the agency similarly exceeded its authority and violated the Administrative Procedure Act’s requirements for notice and comment, the NRF statement says.
The Electronic Payment Coalition, which represents the electronic payments industry, criticized the IFPA’s continued support. “This reckless, misguided policy has drawn bipartisan opposition from federal banking regulators under both the Biden and Trump administrations. It threatens to disrupt the payments system, drive up costs and create chaos for millions of Illinois businesses and consumers. It’s time for Illinois to stop playing politics, stop delaying the inevitable and repeal this disastrous law,” says Richard Hunt, EPC executive chairman.
Plaintiffs include FMI-The Food Industry Association, Illinois Fuel and Retail Association, Illinois Restaurant Association, Illinois Retail Merchants Association, National Association of Convenience Stores, National Grocers Association, National Retail Federation, Restaurant Law Center, and the Retail Litigation Center.
