The Illinois attorney general (AG) recently filed a brief defending the Illinois Interchange Fee Prohibition Act (IFPA) in an appeal arising out of litigation captioned Illinois Bankers Association v. Raoul. The AG asked the Seventh Circuit to affirm a lower court’s decision to uphold the IFPA’s ban on certain interchange fees, also known as card “swipe” fees. The industry argues that the law is unconstitutional or inconsistent with federal law. The AG also asked the Seventh Circuit to overturn the lower court’s decision that the act’s data usage limitation is preempted by federal law.

The IFPA — initially passed in June 2024 and set to become effective on July 1, 2026 — met near-immediate opposition. Several industry trade groups, including the American Bankers Association and Illinois Bankers Association, challenged the act’s interchange fee prohibition and data usage limitation in federal court shortly after its passage, naming Illinois AG Kwame Raoul as the defendant. The plaintiffs have argued that these provisions of the act violate federal law, are preempted by national banking regulations, and will disrupt the national payments system if allowed to proceed. There are two primary arguments:

• First, the industry challenged the act’s prohibition on banks, payment networks, and other entities that facilitate, service, process, or manage electronic payments from receiving or charging an interchange fee on the tax or gratuity portions of electronic payment transactions as unconstitutional.
• Second, the industry argued that the IFPA restricts banks and other entities from using transaction data for purposes other than processing the transaction, except as required by law, and that this restriction is preempted by federal banking regulations.

On February 10, 2026, the U.S. District Court for the Northern District of Illinois issued a mixed ruling in the case, finding that the IFPA’s prohibition on interchange fees is not preempted by federal law but that the data usage limitation is preempted. Specifically, the court found that:

• First, with respect to interchange fees, the court held that the fees at issue are set by card networks rather than banks, such that placing prohibitions on these fees does not directly regulate banks or directly intrude on federally authorized banking powers.
• Second, with respect to data usage, the court determined that prohibiting national financial institutions from using transaction data for purposes other than facilitating or processing payments significantly interferes with their federally authorized data-processing powers.

Consistent with its holding, the court permanently enjoined enforcement of the IFPA’s data usage limitation against national banks, federal savings associations, federal credit unions, and out-of-state banks, in addition to other entities participating in electronic payment transactions when they are acting to facilitate those institutions’ powers.

The Seventh Circuit has set a briefing deadline of May 1, 2026, with oral arguments expected later that month. A decision by the Seventh Circuit upholding the IFPA’s interchange fee prohibition, data usage limitation, or both, will create substantial challenges for financial institutions and payment networks operating in Illinois. As plaintiffs have stated in their filings, if the IFPA’s restrictions become effective, they will likely impact how businesses operate in Illinois, introduce disruptions to the national card payment infrastructure, and inhibit routine bank processes that rely on transaction data, such as fraud prevention and risk management. In addition, compliance with the act will be imperative, as violations of the interchange fee prohibition can result in a $1,000 civil penalty per transaction and violations of the data usage limitation constitute violations of Illinois’ Consumer Fraud and Deceptive Business Practices Act. Financial institutions should monitor this case and, if the IFPA is upheld, be prepared to update their processes and procedures to comply with the act before the July 1, 2026, effective date.

Troutman Pepper Locke State Attorneys General Team

	Ashley Taylor – Co-leader and Firm Vice Chair Ashley is co-leader of the firm’s nationally ranked State Attorneys General practice, vice chair of the firm, and a partner in its Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group. He helps his clients navigate the complexities involved with multistate attorneys general investigations and enforcement actions, federal agency actions, and accompanying litigation.
	Clay Friedman – Co-leader Clay co-leads the firm’s State Attorneys General practice and is nationally ranked by Chambers USA for AG Government Relations and in Best Lawyers for Advertising Law. He has dedicated his entire career to state attorney general and federal work, serving for nearly a decade in a senior role and more than 25+ years in private practice. Clay focuses his practice on helping industry-leading companies mitigate the risks associated with state and federal regulatory investigations and associated litigation.
	Chris Carlson Chris advises clients on regulatory, civil, and criminal investigations and litigation. With a background as an assistant attorney general, he provides practical guidance to clients with matters involving state attorneys general and federal regulatory agencies.
	Lauren Fincher Lauren has vast experience handling state attorneys general investigations, navigating complex regulatory compliance matters, and providing strategic counsel in enforcement actions across various industries. She helps clients manage high-stakes regulatory matters and guides them through complex legal landscapes.
	Stephen Piepgrass Stephen leads the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group, representing clients in single and multistate enforcement actions, including inquiries and investigations, as well as litigation involving state attorneys general and other state and federal governmental enforcement bodies. He has significant experience handling actions with federal agencies, including the CFPB and FTC, as well as single plaintiff and class action litigation for clients in highly regulated sectors such as financial services, health care, pharmaceutical, and education.
	Michael Yaghi Mike handles high-profile state attorneys general, FTC, and CFPB investigations by advising clients through these complex government inquiries. He assists clients through the entire life cycle of investigations, from regulatory enforcement through formal litigation.
	Matthew J. Berns Drawing on his experience in senior leadership roles in the New Jersey Attorney General’s and Governor’s Offices and as a trial attorney for the U.S. Department of Justice, Matt provides an insider’s perspective when guiding clients through complex government investigations, litigation, and other actions.
	Samuel E. “Gene” Fishel Gene is a former regulator with two decades of experience who has overseen state privacy and cybersecurity regulation enforcement, led national, multistate attorneys general privacy investigations, and prosecuted computer crimes at the state and federal levels. He has served at the forefront of state attorney general and federal enforcement, and utilizes this experience to proficiently represent client interests.
	Jeff Johnson Jeff helps clients navigate complex regulatory and litigation challenges with local, state, and federal authorities. His clients benefit from his decade of broad litigation experience, understanding of emerging state and federal regulatory issues, and strong relationships with attorneys general across the U.S. In addition to handling cases from trial through state or federal appeals, Jeff serves as amicus counsel in advancing legal rules to support his clients’ vital interests.
	Jay Myers Jay assists clients in heavily regulated industries, including health care, energy, insurance, emerging industries, and data privacy. He provides both regulatory legal advice and government relations strategies. Jay’s past and current clients include Fortune 10 companies, startups, nonprofits, industry associations, and advocacy groups. Recognizing that state government matters are often complex and multifaceted, he utilizes regulatory guidance, government advocacy, or both in tandem to deliver tailored solutions for each client’s unique needs.
	Zoe Schloss Zoe represents clients in litigation and government investigations. As former deputy attorney general for the Delaware Department of Justice, she is an experienced litigator who understands the enforcement priorities that impact her clients. Zoe works with individuals and corporate entities in highly regulated industries, including financial services, health care, and energy.
	Jessica Birdsong Jessica is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement Practice Group. She received her J.D. from the University of Richmond School of Law, magna cum laude, where she served as associate articles editor of the Journal of Law & Technology.
	Nick Gouverneur Nick is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement Practice Group. He received his J.D. from the University of Illinois College of Law, where he served as a member of the Journal of Law, Technology & Policy.
	Troy Homesley Troy is an accomplished litigator who has represented and defended clients across a wide range of complex, high-stakes disputes at both the trial and appellate levels. He has represented technology companies, business executives, law firms, investment funds, high-ranking federal officials, international non-profits, and asylum seekers. Troy draws on his broad litigation experience to advise clients before litigation arises, while claims are pending or threatened, and leading up to and through trial and appeals.
	Namrata Kang Namrata (Nam) is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group, based in the Washington, D.C. office. She routinely advises clients on a wide variety of state and federal regulatory matters, with a particular emphasis on state consumer protection laws relating to consumer financial services and marketing and advertising. Nam’s experience transcends multiple industries, including financial services, telecommunications, media, and sports betting.
	Michael Lafleur Michael is an associate in the firm’s Regulatory Investigations, Strategy, and Enforcement Practice Group. Based out of the firm’s Boston office, Mike has deep experience in litigation, investigations, and other regulatory matters involving state-level regulators and state attorneys general.
	William LaRosa Bill represents clients in complex regulatory investigations, state attorneys general matters, and enforcement proceedings, drawing on his experience as a former assistant U.S. attorney and private sector litigator in high stakes, multistate AG and regulatory matters.
	Philip Nickerson Philip represents clients in sectors such as financial, tech, real estate, and energy in a range of litigation matters. He is experienced in matters involving trade secrets, government investigations, commercial contracts, construction and product defect.
	Lane Page Lane specializes in federal and state regulatory investigations and complex civil litigation. He focuses on representing financial institutions and other businesses, with a particular emphasis on consumer protection and fair lending issues.
	Dascher Pasco Dascher is an attorney within the Regulatory Investigations, Strategy, and Enforcement practice, based in the Richmond office. She joined our firm after working in personal injury and medical malpractice for a Virginia trial law firm. Dascher brings varied legal experience to the firm with strong litigation and regulatory strategy capabilities.
	Kyara Rivera Rivera Kyara is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement Practice Group. She received her J.D. from the University of Richmond School of Law, cum laude, where she served as publications and online editor of the Public Interest Law Review.
	Timothy Shyu Timothy is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement Practice Group.
	Trey Smith Trey focuses his practice on representing and advising regulated utilities before state public utility commissions. He routinely helps clients obtain certificates of public convenience and necessity for transmission infrastructure. In this role, Trey works with his clients’ subject-matter experts to manage administrative proceedings, including by preparing initial filings; responding to discovery requests; drafting rebuttal testimony; and litigating any disputed issues.
	Daniel Waltz Dan helps clients navigate all aspects highly regulated relationships between industry participants and federal, state and local governments. Whether engaging with regulators, negotiating transactions or representing clients in the courtroom, he delivers solutions that help his clients achieve their strategic goals.
	Stephanie Kozol Stephanie is Troutman Pepper Locke’s senior government relations manager in the state attorneys general department.