Office of the U.S. Attorney for the Northern District of Illinois at Dirksen Federal Building (foreground) in downtown Chicago.
Credit unions are pressing forward in their legal fight against the Illinois Interchange Fee Prohibition Act (IFPA), filing a new legal brief detailing why they should also obtain injunctive relief from the law. The IFPA bans financial institutions from charging or receiving interchange fees on the portion of a debit or credit card transaction attributable to tax or gratuity in Illinois.
America’s Credit Unions, the Illinois Credit Union League and other banking organizations argued that credit unions, like banks and savings associations, are federal instrumentalities. They contended that the IFPA interferes with the Federal Credit Union Act in the same way it conflicts with the National Bank Act (NBA) and Home Owner’s Loan Act (HOLA), the basis on which the court previously granted a preliminary injunction for banks and savings associations.
On Monday, the credit union and banking groups filed a motion for summary judgment and a permanent injunction, asserting that the IFPA is preempted by federal law.
“This is the next and important step in our path to strike down this law for credit unions. Should this law go into effect, it would be impossible to comply with and cause a complete paralyzation of how payments operate for all those who conduct business in Illinois," Carrie Hunt, America's Credit Unions' chief advocacy officer, said.
The IFPA, set to take effect on July 1, 2025, prohibits financial institutions from charging or receiving interchange fees on portions of debit or credit card transactions that cover state or local taxes and gratuities. Previously, the U.S. District Court for the Northern District of Illinois granted a preliminary injunction against the IFPA for national banks and federal savings associations, citing preemption by federal statutes like the NBA and HOLA. However, the court denied similar relief for credit unions, prompting the latest legal action.
The latest filing also seeks relief for state-chartered credit unions and outlines the broader impact on payment networks.
As the case progresses, the court's decision on this motion will have significant implications for credit unions operating in Illinois and potentially influence similar legislation in other states.
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Michael Ogden
Editor-in-Chief at CU Times. To connect, email at [email protected]. As Editor-in-Chief of CU Times since 2016, Michael Ogden has led the editorial team in all aspects of content strategy and execution, including the creation of the publication’s exclusive and proprietary research database of the credit union industry’s economic landscape. Under Michael’s leadership, CU Times has successfully shifted to an all-digital editorial product with new focuses on the payments, fraud, lending and regulatory beats. Most recently, he introduced a data-focused editorial product for subscribers that breaks down credit union issues into hard data, allowing for a deeper and more factual narrative for readers. In 2024, he launched the "Shared Accounts With CU Times" podcast, which offers a fresh, inside-the-newsroom perspective through interviews with leaders from the credit union industry and the regulatory world. He dives into pressing credit union issues, while revealing the personalities working behind-the-scenes to push the credit union world forward. His background includes years as a radio and TV anchor/reporter and a public relations and digital/social media manager, where he covered the food and music industries, as well as cooperatives and credit unions. Over the years, he has launched numerous exclusive video and podcast series, including a successful series of interactive backstage interviews with musicians at music festivals, showcasing his social media and live streaming production skills.
