The latest credit union filing in the legal challenge to the Illinois Interchange Fee Prohibition Act (IFPA) details why credit unions should also obtain injunctive relief from the law. The IFPA would ban financial institutions from charging or receiving interchange fees in Illinois on the portion of a debit or credit card transaction attributable to tax or gratuity. 

America’s Credit Unions, the Illinois Credit Union League, and other banking organizations wrote in Monday’s filing that credit unions are federal instrumentalities, just like banks and savings associations, thus the IFPA interferes with the exercise of Federal Credit Union Act powers in the same way it does under the National Bank Act (NBA) and Home Owner’s Loan Act (HOLA). This conflict with the NBA and HOLA is why the court granted the preliminary injunction to banks and savings associations. 

“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," said Carrie Hunt, America's Credit Unions chief advocacy officer

In December, the U.S. District Court for the Northern District of Illinois court granted relief from the law to banks and savings associations. America’s Credit Unions, the Illinois Credit Union League, and other organizations filed an additional brief in January explaining why credit unions should also be granted relief. 

The brief also seeks relief for state-chartered credit unions, including ones chartered outside of Illinois, and includes an expert report outlining how the payment system works and why payment networks should also obtain relief from the IFPA.

The court denied the preliminary injunction request for credit unions in February.