On March 13, the OCC filed an amicus curiae brief in the U.S. Court of Appeals for the 7th Circuit, urging the court to reverse the district court’s ruling on the Illinois Interchange Fee Prohibition Act’s (IFPA) interchange fee prohibition, affirm its ruling on the data usage limitation, and remand for entry of a permanent injunction enjoining both provisions. The district court had allowed enforcement of the IFPA’s ban on interchange fees for the state and local tax and gratuity portions of transactions while blocking enforcement of the IFPA’s data usage limitation (covered by InfoBytes here).

The OCC argued that the interchange fee prohibition prevents or significantly interferes with national banks’ and federal savings associations’ federally authorized powers to lend, receive deposits, and be compensated for payment processing, and is therefore preempted by the National Bank Act (NBA) and the Home Owners’ Loan Act (HOLA). The OCC contended that the district court applied a legally erroneous directness standard rather than the preemption standard established in the U.S. Supreme Court’s 1996 decision in Barnett Bank of Marion County v. Nelson, as reaffirmed in the Supreme Court’s 2024 decision in Cantero v. Bank of America, N.A., which directs courts to conduct a practical assessment of the nature and degree of a state law’s interference with federally authorized banking powers. The OCC also argued that the district court erred by focusing on whether card networks set interchange fees rather than on national banks’ power to receive and charge such fees.

On the IFPA’s separate data usage limitation, the OCC supported the district court’s holding that the provision — which prohibits entities from using or distributing transaction data except to process transactions or as required by law — is preempted by the NBA. The OCC asserted that federal law authorizes national banks and federal savings associations to use transaction data broadly, including for fraud detection and risk management, and that HOLA’s parallel preemption framework similarly bars Illinois from restricting federal savings associations’ data use powers. The OCC warned that if IFPA is not permanently enjoined, it “may well trigger a cascade of similar state and local laws” that would give rise to a “fractured, highly inefficient, and unworkable nationwide payment system.” The filing of the OCC’s brief followed the 7th Circuit’s March 2 order expediting the briefing schedule and the plaintiffs’ March 6 opening brief (covered by InfoBytes here).