WASHINGTON – The Electronic Payments Coalition (EPC) today said a major federal court action involving Illinois’s interchange law should serve as a warning to every state considering similar legislation pushed by corporate mega-store lobbyists.
The Seventh Circuit Court of Appeals today vacated a lower court decision in ongoing litigation over Illinois’s interchange law and sent the case back to the district court with instructions to consider recent actions by the nation’s top federal banking regulator, the Office of the Comptroller of the Currency (OCC), reaffirming that state interchange laws are preempted by the National Bank Act.
“The Court of Appeals rightly recognized what the Office of the Comptroller of the Currency has said from the beginning: states cannot impose conflicting and commerce-disrupting requirements on the national payments system,” said Electronic Payments Coalition Executive Chairman Richard Hunt. “These state interchange laws are deeply flawed, unworkable, economically disruptive and a recipe for confusion for consumers, small businesses, community banks and credit unions. Lawmakers across the country should take notice before rushing forward with legislation that risks creating the same card chaos and legal uncertainty now unfolding in Illinois.”
State interchange proposals have faced opposition from local financial institutions, labor organizations, consumer advocates, small businesses and community groups who warn the measures could disrupt commerce, undermine fraud protections, create operational confusion at checkout and expose local economies to costly litigation and compliance burdens.
The Seventh Circuit’s docket order noted: “After the district court entered its decision in this case, the Comptroller of the Currency issued an Interim Final Rule … and an order, ‘Order Preempting the Illinois Interchange Fee Prohibition Act’ … The district court should address these matters, and any related issues, before this court attempts to do so. We therefore vacate the judgment of the district court.”
