Retail Litigation Center Urges Seventh Circuit to Uphold Illinois Interchange Fee Law

The Retail Litigation Center (RLC) today filed an amicus brief in the U.S. Court of Appeals for the Seventh Circuit supporting the state of Illinois in an appeal challenging the Illinois Interchange Fee Prohibition Act (IFPA). The case, brought by banking trade associations, seeks to invalidate Illinois’ narrowly tailored law barring payment card networks from charging interchange fees on taxes and tips.  

“Big banks and card networks have turned swipe fees into a hidden profit center that hits local businesses and everyday consumers alike,” said Monica Welt, president of the Retail Litigation Center. "Illinois is simply making sure that merchants aren’t paying fees on money that’s meant for tips and taxes. It’s a smart and legal move to keep costs down for businesses and consumers." 

In its brief, the RLC explains that the law falls well within states’ traditional authority and is not preempted by federal banking statutes because interchange fees are set by payment card networks, not banks. As the brief emphasizes, “The IFPA does not interfere with any national bank powers, much less ‘significantly’ so.… Banks are passive actors in this system—they simply receive the fees set and calculated as a result of the exchange between merchants and networks.”  

“Retailers operate on razor thin margins and should not be forced to pay swipe fees on money that was never theirs to begin with,” said Welt. “Illinois took a modest, commonsense step to rein in a hidden and regressive cost that ultimately hits consumers, and the district court correctly recognized that federal law does not give banks a blank check to shield excessive fees from reasonable state oversight.”  

The brief was drafted by Owen Glist and Patrick M. Kennedy of Constantine Cannon LLP. 

###

Directed by the chief legal officers of the country's leading retail companies, the Retail Litigation Center (RLC) is the only organization dedicated to advocating for the industry's top priorities in the federal and state judiciary. The RLC also works with leading law firms and retail corporate counsel to develop forward-thinking strategies to combat meritless mass action litigation. Founded by the Retail Industry Leaders Association (RILA) in 2010 as an independent organization, the RLC is a 501(c)(6) membership association open to all retailers and select law firms.