A federal district court in North Dakota has struck down the Federal Reserve’s Regulation II, a rule that small business advocates say allows banks to profit excessively from debit card swipe fees. The court found the Fed overstepped its authority under the Durbin Amendment, marking a major legal victory for the National Federation of Independent Business (NFIB) and other retail groups. However, the decision’s implementation is on hold pending a government appeal.
NFIB has long argued that high swipe fees impose disproportionate costs on small, independently owned retailers, eroding already thin profit margins.
“With cash payments becoming increasingly less common, these skyrocketing fees place an immense burden on small retailers,” said Beth Milito, NFIB Vice President and Executive Director of the Small Business Legal Center. “Congress clearly outlined what the Federal Reserve should consider when setting the permissible amount of swipe fees and small businesses are relieved that the federal district court recognized the agency’s abuse of authority.”
The case, Corner Post, Inc. v. Board of Governors of the Federal Reserve System, saw NFIB file an amicus brief alongside the Retail Litigation Center, Inc. and the Merchant Advisory Group, arguing that Regulation II contradicts the Durbin Amendment and imposes massive, improper costs on small businesses nationwide.
NFIB’s Small Business Legal Center continues to represent the interests of small business owners in more than 40 active cases across federal, state, and U.S. Supreme Court venues.