Not a Lexis+ subscriber? Try it out for free.
LexisNexis® CLE On-Demand features premium content from partners like American Law Institute Continuing Legal Education and Pozner & Dodd. Choose from a broad listing of topics suited for law firms, corporate legal departments, and government entities. Individual courses and subscriptions available.
by Robert J. Pile and Heather J. Howdeshell
TCF National Bank (TCF) has filed a suit in the United
States District Court in South Dakota challenging the constitutionality of
Section 1075 of the Dodd-Frank Wall Street Reform and Consumer Protection Act
(known as the Durbin Amendment). The Durbin Amendment authorizes the Federal
Reserve to implement regulations governing payment card transactions in the
areas of (1) debit interchange fees, (2) payment card minimum and maximum
purchase prohibitions, and (3) debit payment network exclusivity.
TCF's lawsuit challenges the constitutionality of the
debit interchange fee regulation on three grounds: (1) that by limiting fees to
below the actual cost to produce the services, the government is taking
property without just compensation; (2) violation of due process related to
Congressional approval of the Durbin Amendment and the absence of public
hearings; and (3) violation of equal protection, because the Durbin Amendment
expressly applies only to issuers with $10 billion or more in assets, thus
leaving unaffected (and potentially advantaged) approximately 99% of U.S.
The Durbin Amendment provides that interchange rates for
electronic debit transactions must be "reasonable and proportionate" to the
actual processing costs incurred by the issuer, taking into account only the
incremental costs of authorizing, clearing and settling electronic debit
transactions, but not other costs incurred by an issuer which are not
specific to a particular debit transaction. Under the Durbin Amendment, the
Board of Governors of the Federal Reserve is tasked with drafting regulations
designed to implement the reasonableness and proportionality requirements for
debit transaction interchange fees by April 21, 2011. The debit transaction
interchange regulations implemented by the Federal Reserve will not apply to
card issuers with assets of less than $10 billion.
Please click on the Attachment: link at the top
of the post to view or download the entire article