Appeals court remands IFPA challenge to lower court

The U.S. Court of Appeals for the Seventh Circuit remanded the legal challenge to the Illinois Interchange Fee Prohibition Act (IFPA) back to the district court for further proceedings.

America's Credit Unions and the Illinois Credit Union League are plaintiffs in this lawsuit. 

The effective date of July 1 remains in effect for the IFPA, which would ban the collection of interchange on tax/gratuity portions of card transactions in the state. 

“In light of the Seventh Circuit's order, we welcome the opportunity to resume our legal challenge to the Illinois Interchange Fee Prohibition Act in district court. As we have consistently argued, the Illinois Interchange Fee Prohibition Act conflicts with federal law, and recent regulatory actions only reaffirm that fact,” the plaintiffs said in response to the appeals court decision.

“The Office of the Comptroller of the Currency’s recent interim final actions directly address the core issues in this case and further strengthen our position that IFPA is preempted by federal law. With the law scheduled to take effect in Illinois on July 1, it is critically important for all parties to recognize the need for a timely resolution to provide certainty for consumers, businesses, and financial institutions.

“Even better would be for the Illinois legislature to recognize that IFPA was a mistake and repeal this misguided law, sparing Illinois consumers and businesses from payment chaos and confusion."

Friday’s decision follows recent actions by the Office of the Comptroller of the Currency (OCC) confirming that federal preemption of the IFPA prevents it from taking effect July 1. 

America’s Credit Unions and the Illinois Credit Union League (ICUL) filed a brief last week arguing that the OCC's actions directly address the core issues raised. America's Credit Unions has engaged the administration and NCUA on the need for a similar preemption rulemaking for credit unions. 

An appellate hearing previously scheduled for Wednesday is canceled, and the district court will now rehear the case. America’s Credit Unions will provide updates as the lawsuit continues.