Yesterday, The U.S. District Court for the District of Columbia issued a decision striking down the Federal Reserve’s price caps on debit interchange fees. U.S. District Judge Richard Leon ruled that the Federal Reserve did not appropriately fulfill Congress’s intent of the Durbin Amendment, a provision of the Dodd-Frank legislation. Fees will not be lowered, however, until the Fed adopts new standards. In the decision, Leon said it should take “months, not years” to develop new rules.
Judge Leon said that the Federal Reserve had not properly interpreted the 2010 financial overhaul law, which directed it to revamp the way banks charge merchants for accepting debit cards. “The board has clearly disregarded Congress’s statutory intent by inappropriately inflating all debit card transaction fees by billions of dollars and failing to provide merchants with multiple unaffiliated networks for each debit card transaction,” Leon said in his ruling.
The court’s ruling was made in response to a lawsuit brought against the Fed by an array of retailers. The court on Wednesday delayed putting the order into effect. It has scheduled a hearing for Aug. 14 to decide on how to proceed.