CHICAGO—While a federal judge Thursday expanded a preliminary injunction against enforcement of an Illinois state law restricting interchange fees to include out-of-state banks, the court denied credit unions’ request to be included in that injunction.
As CUToday.info reported, the initial injunction to provide relief from the Illinois Interchange Free Prohibition Act (IFPA) was granted for banks and savings associations, but the court excluded CUs, requesting more information related to the Federal Credit Union Act.
As CUToday.info reported, last month America’s Credit Unions, together with the Illinois Credit Union League, American Bankers Association, and Illinois Bankers Association, filed a brief with the U.S. District Court for the Northern District of Illinois explaining why credit unions should be included.
The IFPA was signed into law in June and would ban financial institutions—including credit unions, payment networks and other entities—from charging or receiving interchange fees in Illinois on the portion of a debit or credit card transaction attributable to tax or gratuity.
Together with the Illinois Credit Union League, America’s Credit Unions challenged the law in August. The trade group outlined how the law would throw the payments system into chaos and undermine significant benefits credit and debit cards provide.
The court’s ruling concurred the federal Riegle-Neal Act overrides the IFPA, thereby extending the injunction to encompass state-chartered banks outside Illinois. Nevertheless, the court remained unconvinced the FCU Act had a similar impact on credit unions, and refrained from extending the injunction to include CUs.
America’s Credit Unions Chief Advocacy Officer Carrie Hunt and Illinois Credit Union League SVP Ashley Sharp, in a joint statement, said, “We are deeply disappointed by (Thursday’s) decision in the Illinois federal court denying relief for credit unions under the Interchange Fee Prohibition Act. Credit unions are left in a state of uncertainty in complying with this misguided law, while federally chartered banks and savings associations and out of state banks received the relief of a preliminary injunction. As the litigation proceeds, we will provide additional clarity to the court regarding preemption under the Federal Credit Union Act so that credit unions are not put at a competitive disadvantage and their members are not harmed by this law. America's Credit Unions and the Illinois Credit Union League will not rest until credit unions also obtain relief and similar proposed bills across the country are invalidated."