Illinois interchange litigation
Illinois Bankers Association v. Raoul
Date: May 7, 2025
Issue: Should the district court grant ABA’s motion for summary judgment and permanently enjoin enforcement of the Illinois Interchange Fee Prohibition Act (IFPA)?
Case Summary: ABA and its co-plaintiffs filed a combined reply brief in support of their motion for summary judgment and opposition to the Illinois attorney general’s (AG) cross-motion for summary judgment in their lawsuit challenging the Illinois Interchange Fee Prohibition Act (IFPA).
The IFPA, which is set to take effect on July 1, 2025, prohibits financial institutions from charging credit and debit card interchange fees on the portions of transactions related to state and local taxes and tips. The law also restricts the sharing of certain data obtained in the transactions.
ABA sued Kwame Raoul in his official capacity as Illinois Attorney General and moved for a preliminary injunction, arguing that the National Bank Act (NBA), Home Owners Loan Act (HOLA), and Federal Credit Union Act (FCUA) preempted the IFPA, and that the IFPA conflicts with the Electronic Fund Transfer Act. On Dec. 20, 2024, Judge Kendall issued a partial preliminary injunction blocking enforcement against national banks and federal savings associations, ruling the ABA was likely to win on the merits of its NBA and HOLA preemption claims. However, the court denied relief to federal credit unions because the FCUA likely did not preempt the IFPA. The court also denied relief to Illinois-chartered institutions due to sovereign immunity. Judge Kendall later extended the injunction to out-of-state state-chartered banks but not to federal credit unions.
On March 17, 2025, ABA moved for summary judgment. On April 3, 2025, the Illinois AG filed a cross-motion for summary judgment and opposed ABA’s motion for summary judgment reprising his central arguments from the preliminary injunction and motion to dismiss stage. The Illinois AG claimed he does not enforce the IFPA and argues that the NBA does not preempt the IFPA because preemption requires “extreme interference.” The Illinois AG also asserted that the wildcard statutes do not protect state financial institutions and, by extension, out-of-state chartered institutions do not qualify for Dormant Commerce Clause protection. Additionally, the Illinois AG contended that the FCUA does not preempt the IFPA and that NBA preemption does not extend to entities other than national banks, because Dodd-Frank bars preemption for subsidiaries, affiliates, and agents.
In response, ABA filed its combined reply brief in support of summary judgment and opposition to the Illinois AG’s cross-motion for summary judgment. and argued that the Illinois AG’s standing and sovereign immunity claims fail. The Illinois AG renewed his argument that the court lacks jurisdiction over ABA’s challenge to the IFPA because he lacks enforcement authority. But ABA pointed out that the court has already ruled that the Illinois AG does have authority to enforce the IFPA. The Illinois AG also repeated his claim that ABA lacks standing to challenge the IFPA’s data usage limitation unless its members show they intend to engage in conduct the IFPA prohibits. ABA urged the court to reject this argument again, as it did at the preliminary injunction stage, because the data usage limitation “arguably proscribes” the conduct its members wish to pursue.
ABA also reiterated that federal law preempts the IFPA. ABA cited Judge Kendall’s earlier ruling that both the NBA and HOLA preempt the IFPA. ABA maintained that the IFPA significantly interferes with national banks’ authority to charge fees, process card transactions, receive deposits, and issue loans through debit cards. Additionally, ABA contended that the IFPA’s data usage limitation disrupts banks’ ability to handle data and conduct credit and debit card transactions, as well as to take deposits and make loans. ABA further contended that the Riegle-Neal Act preempts the IFPA for out-of-state, state-chartered banks and that the dormant Commerce Clause bars states from enforcing discriminatory laws like the IFPA against those institutions. To give effect to these protections, ABA urged the court to issue an injunction allowing card networks, processors and other non-exempt entities to support these institutions’ ability to charge or receive interchange fees. ABA contended that Illinois cannot circumvent federal protections by targeting service providers and that equitable principles warrant a broad injunction to ensure complete and effective relief for federally protected institutions.
Bottom Line: ABA seeks a permanent injunction to block enforcement of the IFPA, arguing that federal law preempts the statute and that its restrictions significantly interfere with federally authorized banking activities.
Document: Brief
