Preemption
Bank of America N.A. v. Riffard
Date: Feb. 18, 2025
Issue: Whether the National Bank Act (NBA) preempts Wisconsin’s notice-to-cure law.
Case Summary: In a 3-0 decision, a Wisconsin Court of Appeals panel ruled the NBA does not preempt Wisconsin’s notice-to-cure law.
The Wisconsin Consumer Act (WCA) regulates consumer credit transactions and debt collection. Under section 425 of the WCA, a creditor must give consumers notice of any default on a credit account and an opportunity to cure the default. At the same time, the Office of the Comptroller of the Currency’s preemption regulation, 12 C.F.R. § 7.4008, provides that state laws regulating credit terms are preempted under the NBA.
After Jean-Pierre Riffard defaulted on monthly payments for two separate Bank of America (BofA) credit cards, BofA sued for breach of contract. Riffard argued the action should be dismissed because BofA failed to notify him of his right to cure before accelerating his debt and suing. In response, BofA argued the NBA preempted Wisconsin’s notice-to-cure law.
The Wisconsin circuit court denied Riffard’s motion to dismiss and ruled for BofA, concluding the NBA preempted the WCA. The court adopted the U.S. District Court for the Western District of Wisconsin’s analysis from Lako v. Portfolio Recovery Associates (2021). The Lako court ruled that the NBA preempted the WCA because the WCA extends beyond debt collection to regulate the lending relationship by imposing conditions on loan acceleration. Riffard appealed the decision.
ABA filed a coalition amicus brief urging the Wisconsin Court of Appeals to affirm, arguing the NBA preempts Wisconsin’s notice-to-cure law because it significantly interferes with national banks’ ability to set credit terms. ABA also argued that applying notice-to-cure requirements to national banks would subject them to a 50-state regulatory framework and defeat the NBA’s purpose of fostering uniform regulation.
The Wisconsin Court of Appeals, however, reversed the circuit court’s ruling, holding that the NBA does not preempt Wisconsin’s notice-to-cure law. Applying the Barnett Bank preemption framework, the court determined that the WCA’s notice requirements do not significantly interfere with BofA’s exercise of its powers, because the law only requires procedural steps before it sues defaulting borrowers. In the court’s view, unlike laws regulating credit terms, the WCA applies only when a credit files a state court collection action. For this reason, the court did not defer to OCC’s preemption regulation because the WCA does not affect the credit card lending operations or credit terms offered by a national bank.
The court noted that states have long regulated debt collection under their police powers to protect consumers, and these laws do not directly control banking operations.
Bottom Line: As of April 1, 2025, BofA has not appealed the Wisconsin Court of Appeals’ decision.
Documents: Opinion
