US Supreme Court Renews Debit Card ‘Swipe Fees’ Challenge

WASHINGTON, DC: Businesses can now more effectively challenge some federal regulations, as the U.S. Supreme Court this week reopened a North Dakota grocery store case over debit card swipe fees and struck down the Federal Reserve’s rule.

The 6-3 decision overturned a lower court’s decision to dismiss Corner Post’s 2021 lawsuit challenging a 2011 rule that governs how much businesses must pay banks when customers use debit cards to make purchases. The dismissal was based on the grounds that the store failed to meet the six-year statute of limitations that typically applies to such disputes.

Swipe fees, also known as interchange fees, reimburse banks for the costs associated with using debit cards. At issue in that case was whether Corner Post was too late in its legal action. The store argued that it should not be bound by the six-year statute of limitations to challenge the 2011 regulation because it began operating in 2018 after that date.

Various conservative and corporate interest groups have backed Corner Post, including billionaire Charles Koch’s network and the U.S. Chamber of Commerce. They argue that companies should have broad leeway when challenging regulations they see as unlawful and burdensome.

The store argued that the six-year limitation period should not begin to run until the business activity was adversely affected, which in the case of Corner Post would have been March 2018, when the store accepted its first debit card payment.

President Joe Biden’s administration, representing the Federal Reserve Board of Governors, argued that adopting Corner Post’s legal position would “significantly expand the class of potential opponents” of government regulation and risk “increasing the burden on agencies and courts.”

Some small business associations have asked the Supreme Court to impose a strict statute of limitations that begins when the rule is finalized. They said allowing lawsuits after that date “would create chaos, uncertainty, and an inconsistent regulatory regime for the nation’s regulated industries and the American people the rules are intended to serve.”