US Supreme Court Weighs Bid to Challenge Debit Card ‘Swipe Fee’ Rule

The U.S. Supreme Court is set to hear a bid to revive a lawsuit aimed at invalidating a contentious debit card “swipe fee” rule. This case has the potential to make federal regulations more vulnerable to legal challenges. In this article we discuss about US Supreme Court Weighs Bid to Challenge Debit Card ‘Swipe Fee’ RuleUS.

US Supreme Court Weighs Bid to Challenge Debit Card ‘Swipe Fee’ Rule

Background

In 2010, the U.S. Congress directed the Federal Reserve to cap the fees in a bid to reduce prices for consumers. The fee cap was included in the Dodd-Frank Wall Street reform law in a provision called Durbin amendment, after its chief supporter, Democratic Senator Richard Durbin.

The Lawsuit (Challenge Debit Card)

Watford City, North Dakota’s Corner Post convenience shop is pleading with the judges to reinstate its case. This lawsuit, which was thrown out by lower courts, targets a 2011 U.S. Federal Reserve regulation governing how much businesses pay to banks when customers use debit cards to make purchases. These swipe, or interchange, fees reimburse banks for costs involved in offering debit cards. The fees are determined by Visa, MasterCard, and other card networks, with a cap of 21 cents per transaction set under the Fed’s rule.

The Contention (Challenge Debit Card)

The question in the dispute is whether Corner Post was too late to challenge the Fed’s regulation in court in 2021. Corner Post has argued that it should not be bound by the six-year statute of limitations that generally applies to such lawsuits because it opened for business in 2018, after that deadline had passed.

Corner Post is supported by several corporate and conservative interest groups, including the United States and the network of billionaire Charles Koch. Chamber of Commerce, contends that businesses should have wide latitude to challenge regulations they consider unlawful and burdensome. The company argues that the six-year time limit should not start running until a business is adversely affected.

US Supreme Court Weighs Bid to Challenge Debit Card ‘Swipe Fee’ Rule

The Opposition

The Federal Reserve Board of Governors, represented by President Joe Biden’s administration, has stated that implementing Corner Post’s legal stance “would substantially expand the class of potential challengers” to government rules and implies that it will “increase the burdens on agencies and courts”.

Small business associations petitioned the justices in a court brief to uphold a stringent statute of limitations that starts to run when a regulation is approved. They said that allowing lawsuits beyond this deadline “would create chaos, uncertainty and inconsistent regulatory regimes for the nation’s regulated industries and the American people the regulations seek to serve”.

The Impact

For a long time, banks and retailers had fought over swipe fees. Before Congress intervened, retailers paid as much as 44 cents per transaction, which they said made it hard for small businesses to accept debit cards. The cap on fees was directed by the Fed to reduce prices for consumers.

Further Details (Challenge Debit Card)

The case, known as Corner Post v. Board of Governors, centers on a 2011 rule issued under the Dodd-Frank financial reform law that sets maximum “swipe fees” that banks can charge for the use of their debit cards. The D.C. affirmed the rule, surviving an early challenge. Circuit Court of Appeals in 2015.

Two trade associations representing convenience stores and gas stations initiated this case in 2021, a decade after the rule was first issued. They were dissatisfied with the outcome of the initial challenge and wanted a second chance to challenge the rule.

The Federal Reserve, the agency that issued the rule, sought to have this second suit dismissed as barred by the Administrative Procedure Act’s statute of limitations. However, the trade associations responded by adding an individual gas station called Corner Post as a co-plaintiff.

US Supreme Court Weighs Bid to Challenge Debit Card ‘Swipe Fee’ Rule

Conclusion

The Supreme Court agreed to take up the case after appellate courts disagreed on whether the 2021 case was brought too late. The justices’ decision on this case could have significant implications for the future of federal regulations and the ability of businesses to challenge them.

As the Supreme Court weighs this bid, the outcome could have far-reaching implications for the future of federal regulations and the ability of businesses to challenge them. I write about US Supreme Court Weighs Bid to Challenge Debit Card ‘Swipe Fee’ Rule.

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