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| Illinois AG files reply brief in IFPA Appellate Case |
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The Illinois Attorney General filed their reply brief in the U.S. Court of Appeals for the Seventh Circuit Friday, seeking to uphold the lower court’s decision on the interchange fee portion of the Interchange Fee Prohibition Act (IFPA) and reverse the decision on the data use provision.
The attorney general’s reply reflects a deliberately narrow reading of federal preemption doctrines, particularly under the National Bank Act and Federal Credit Union Act. Their reply argues that the IFPA’s interchange fee provision does not “significantly interfere” with federal powers, citing a standard set forth in Barnett Bank of Marion County, N.A. v. Nelson, which requires more than an inconvenience on federally regulated entities. It further argues that the National Bank Act preemption standard does not extend to federal credit unions.
The brief also asserts that the Federal Credit Union Act lacks an express preemption clause and does not enumerate interchange fee collection as a core power because it does not “list collecting interchange fees set by payment card networks on tax and gratuity among federal credit unions’ powers” and consequently “the Interchange Fee Limitation will not have any major effect on any federal interest.”
The brief further argues that even if the interchange fee provision is preempted by financial institutions, that the preemption should not be extended to payment card networks, citing language in the National Bank Act that preempts state law applicability to “any subsidiary, affiliate, or agent of a national bank” and arguing that preemption should not extend downstream to networks like Visa or Mastercard. This is a significant move because, in practice, interchange fees are set and enforced by these networks rather than financial institutions themselves. If accepted, this distinction could allow states to regulate key aspects of the payments system indirectly, even where direct regulation of financial institutions would be preempted.
Finally, the brief calls for the court to reverse the district court’s decision on data usage in an attempt to avoid judicial review on the merits arguing that the case lacked standing on a “pre-enforcement challenge” because it wasn’t likely to prohibit the use of transaction data for the use intended.
America’s Credit Unions and the Illinois Credit Union League are working on a reply and responsive brief which is due by April 17, 2026.
Additional resources on interchange are available for credit unions in the Resource Library, as well as a recent Compliance Blog entry outlining what the IFPA would mean for credit unions.
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