Interchange Ruling at the District Court Level

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Last week the U.S. District Court for North Dakota ruled that the Federal Reserve exceeded its authority when it included fraud-loss adjustments and other essential costs in its 2011 debit interchange rule. The court sided with retailers in the case, Corner Post v. Board of Governors of the Federal Reserve System, striking down critical fraud-loss protections in debit interchange fees.

“We at Cornerstone League are disappointed in this ruling, as it deprives credit unions of the ability to recover losses from debit card fraud,” said Caroline Willard, president/CEO of Cornerstone League. “Excluding debit card fraud losses from Regulation II will negatively impact credit unions, limiting funding for innovation, new products and services, and data security.”

Willard added that consumers will be negatively impacted because they may lose access to affordable products and services and their data security could be at risk. “This change would unfairly shift the burden and cost to our members, threatening their financial well-being,” she said.

Interchange fee income is critical to support a safe, affordable payments system. Cornerstone League join the league system and America’s Credit Unions in its commitment to defending credit unions’ interests and fighting to preserve interchange income that supports secure, sustainable electronic payments.

Preserving interchange is something we at Cornerstone have been fighting for since the topic first came up and the team has done a lot of research on the topic to help credit unions communicate to lawmakers that “interchange works.” Please see the following resources we’ve developed. Find more on our member-only (log in required) Interchange Resource page, which we will continue to update to reflect current events.

The Credit Card Competition Act Pours Salt on a Wounded Economy

It’s Time to Make Our Voices Heard on Interchange