EDWARDSVILLE, Ill.–Scott Credit Union CEO Scott Padak is appearing in a new television ad in this state that urges repeal of the Interchange Fee Prohibition Act, which is strongly opposed by credit unions and banks and which is to go into effect on July 1.
The Illinois Interchange Fee Prohibition Act (IFPA) would prohibit payment card networks and financial institutions from charging interchange fees (swipe fees) on the sales tax and tip portions of credit/debit card transactions.
As the CU Daily has been reporting, America’s Credit Unions and the Illinois Credit Union League are among the plaintiffs in a lawsuit seeking to stop the legislation. The Seventh Circuit Court has already upheld most of the bill, but its implementation remains a confusing issue, as the Office of the Comptroller of the Currency has issued an interim final rule and interim final order affirming that federal law allows national banks to charge certain fees regardless of whether they are set by the bank or a third party, and preempts the new Illinois law regulating interchange fees.
A Conundrum
That has created a conundrum for out-of-state based, state-chartered institutions.
Now, the Electronic Payments Coalition (EPC), of which credit union trade groups are a member, has released a new statewide advertisement featuring Padak.
The association said the law “saddles Illinois community banks and credit unions with costly new compliance burdens, legal uncertainty, and competitive disadvantages. It also threatens to create confusion and chaos for small businesses and consumers who rely on local financial institutions, raising questions about whether their cards will work for certain purchases.”
‘It’s Not Fair’
In the new ad, which is filmed inside Scott CU’s offices, Padak says, “For 80 years this credit union has served the military, veterans and our local community. Today, we’re still helping our members through affordable loans, access to credit and interest-bearing deposit accounts. We’re proud to call Illinois home, but lawmakers approved a policy that is bad for consumers and bad for business, Big banks will be fine, but local banks and credit unions are left in the lurch. The credit card chaos bill takes effect July 1st. Springfield needs to fix this. It’s not fair.”
Brief Filed in Illinois Case
Separately, America’s Credit Unions Unions submitted a court filing with the Seventh Circuit in the case involving the Illinois Fee Prohibition Act, in which CUs are a plaintiff, arguing that the Office of the Comptroller of the Currency’s (OCC) recent order and rule related to the Illinois Interchange Fee Prohibition Act (IFPA) confirm preemption of the state legislation.
In addition, to ACU, the brief was submitted with the Illinois Credit Union League, Illinois Bankers Association, and American Bankers Association.
In the brief, the plaintiffs argue that since the IFPA interferes with federal credit unions’ powers in the same way as national banks, the OCC preemption should apply to federal credit unions as well, and that the OCC preemption actions related to the IFPA should persuade the court to issue a permanent injunction, preventing the IFPA from taking effect July 1.
The orders by the OCC explicitly provide that national banks and federal savings associations are neither subject to nor required to comply with the IFPA, the brief states.
The brief further argues that since federal agencies acting within the scope of their Congressionally delegated authority may preempt state legislation, and the OCC has exercised such authority with the orders, the IFPA should not be allowed to take effect.
