The Bank Policy Institute and The Clearing House filed a motion to intervene in a retailer lawsuit seeking to invalidate Regulation II’s standard for setting debit interchange fees at levels higher than federal statute permits. It’s the latest turn in a case that made its way to the U.S. Supreme Court earlier this year.
A group of North Dakota retailer associations and truck stop Corner Post sued the Federal Reserve in 2021 on the grounds that Reg II allows for higher interchange fees as long as such fees are “reasonable and proportional to the cost incurred by the issuer with respect to the transaction.” A district court dismissed the lawsuit because the six-year statute of limitations for challenging the regulation had passed, as the regulation went into effect in 2011. However, the Supreme Court ruled that the statute of limitations does not accrue until the plaintiff is injured by final agency action, allowing the case to move forward in district court.
In their motion to intervene filed in U.S. District Court for North Dakota, the BPI and TCH argue that vacating Reg II would severely harm their members by threatening their ability to recover a reasonable return on debit card transactions, as required by the Durbin Amendment.
In a statement, American Bankers Association Card Policy Council Executive Director Tom Rosenkoetter said ABA strongly supports the effort by BPI and TCH to give banks of all sizes a voice in the legal dispute over debit interchange.
“BPI and TCH’s intervention will ensure that our industry can challenge the merchants’ unjustified demands to slash debit interchange and avoid any further consumer harms on top of what has already resulted from the current rule,” Rosenkoetter said. “Recently, community advocates, academics and a host of stakeholders outside of banking have joined together to oppose similar efforts to reduce debit interchange given the critical role it plays in supporting financial inclusion, fraud protection and other important bank programs. We urge those voices to be heard in this case as well.”
