NCUA interim final rule plainly shows federal preemption of IFPA
Joining together in strong support of the NCUA’s interim final rule, America’s Credit Unions, Illinois Credit Union League, American Bankers Association, and Illinois Bankers Association filed detailed comments Thursday, indicating it appropriately makes clear that the Illinois Interchange Fee Prohibition Act (IFPA) and similar state laws are fully preempted by federal statute.
NCUA’s interim final rule appropriately makes clear that the Illinois Interchange Fee Prohibition Act (IFPA) and similar state laws are fully preempted by federal statute. America’s Credit Unions, the Illinois Credit Union League, American Bankers Association, and Illinois Bankers Association filed detailed comments in strong support of the NCUA’s interim final rule Thursday.
“In short, the Federal Credit Union Act, and the NCUA regulations implementing it, plainly preempt the IFPA and any similar state or local intrusions on federal credit unions’ power to collect interchange fees,” the letter reads. “The NCUA’s interim final rule commendably underscores that point, helping shield federal credit unions and the broader American economy from the costs of intrusive legislation.”
NCUA’s rule clarifies that: preemption of state laws purporting to limit or affect the conditions of federal credit union loans and lines of credit is not limited to charges to members; and federal credit unions enjoy broad authority to charge and receive non-interest charges and fees, including interchange fees for credit and debit card processing.
The comment letter emphasizes:
- The Federal Credit Union Act grants federal credit unions broad power to collect fees and interchange fees fall squarely within federal credit unions’ fee-charging powers;
- NCUA’s interim final rule confirmed credit unions’ power to collect interchange fees and preempt state laws that interfere with that power. This also addresses a recent district court decision that reached the contrary conclusion on both fronts, potentially opening the door to state and local interference with federal credit unions’ exercise of their fee powers; and
- NCUA’s interim final rule benefits federal credit unions’ members and the American economy, and if the IFPA were not preempted, compliance would require sweeping changes to payment card systems, the costs of which would ultimately be borne by consumers.