On March 17, a group of banking and credit union trade associations (the plaintiffs) filed a motion for summary judgment in the U.S. District Court for the Northern District of Illinois, arguing the Illinois Interchange Fee Prohibition Act (IFPA) is preempted by federal law and that its enforcement should be permanently enjoined. The plaintiffs contended the IFPA disrupts the national card payment system by imposing restrictions on interchange fees and the use of payments data, which are federally authorized and regulated under the National Bank Act (NBA), Home Owners Loan Act (HOLA), the Federal Credit Union Act (FCUA), and the section of the EFTA known as the Durbin Amendment.
As previously covered by InfoBytes, Illinois enacted HB 4951 in June 2024, which sought to ban credit card issuers and any other entity that facilitates or processes electronic payments from charging or receiving an interchange fee on the portion of transactions attributable to taxes or gratuities. Two months after the IFPA was passed, the plaintiffs sued the Illinois attorney general to prevent the IFPA from becoming law (covered here).
The court granted a partial preliminary injunction in February after finding the plaintiffs were likely to succeed on their preemption claims under the NBA and HOLA, but reserved judgment on claims brought under the FCUA, the dormant Commerce Clause, and the Durbin Amendment (covered by InfoBytes here). The plaintiffs asserted the IFPA should not apply to card networks or other entities involved in the payment process to ensure federal preemption is effective.
In their motion for summary judgment, the plaintiffs argued the IFPA’s limitations on interchange fees and data usage prevent credit unions from exercising their federal powers. They requested the court reconsider preemption under the FCUA, emphasizing that the IFPA’s application solely to credit unions would increase costs for members or force credit unions to cease offering services, potentially exceeding their net income.
