On February 20th, The Supreme Court of the United States (SCOTUS) heard oral arguments in Corner Post, Inc. v. Board of Governors of the Federal Reserve System, a little-known case with enormous implications.
The case originated in 2010 when Congress amended the Electronic Fund Transfer Act, which allows for an administrative fee associated with debit card transactions known as the “swipe fee.” This fee is assessed at the merchant level every time a customer uses a debit card for a purchase. The original rule was enacted in the summer of 2011, setting the maximum fee at 21 cents plus 0.05% of the transaction.
Merchants who primarily deal in low-dollar purchases were adversely affected. Grabbing a Coke and a candy bar at your local convenience store could cost the store as much as 10% of the sale on a two-dollar or less snack run. This is why many merchants now have a minimum purchase rule for debit cards.
The maximum swipe fee rule was not created to allow banks and finance companies to charge excess fees. That was already taking place. The rule was established to rein in swipe fees to prevent excess harm to small businesses and consumers.
Ten years later, in April of 2021, the North Dakota Retail Association and the North Dakota Petroleum Marketers Association filed suit in the United States District Court of North Dakota. They argued that the maximum swipe fee rule violated the Administrative Procedure Act, saying it was arbitrary, capricious and unconstitutional. In a move designed to keep the court from dismissing the case on statute of limitations grounds, the plaintiffs amended their complaint and added Corner Post as a co-plaintiff.
Corner Post is a truck stop convenience store in North Dakota. The store opened in 2017 and began accepting debit card payments in 2018.
The Federal Reserve System countered that Corner Post’s claim was also outside the six-year statute of limitations. The plaintiffs, including Corner Post, appealed to the United States Court of Appeals for the Eight Circuit in 2022. The appeals court upheld the original ruling about the statute of limitations.
In response, the plaintiffs appealed to the SCOTUS. On February 20, 2024, the high court heard oral arguments. Corner Post argued that the appellate court erred in ruling that the statute of limitation began with the date of the original rule (2011) and not the date that the offended party was first harmed (2018).
All this sounds complicated, so what does it mean, and how does it affect working-class Americans?
This is about more than swipe fees at the grocery store; it is about how regulatory rules are established and when they can be challenged. The Federal Reserve is seeking to eliminate statutes of limitation for any regulation established by a federal agency.
This would open the door for an unending parade of lawsuits challenging everything from environmental regulations to healthcare reimbursement rates and long-standing workplace safety rules. The effect would be appellate court chaos and the overturning of regulations that protect working-class families, union laborers and most of the middle class.
This case has been falsely presented as the story of a small business crushed and choked out by over-regulation. In reality, the case tells a different story.
A host of lobbying groups led by the Koch Brothers have filed petitions supporting Corner Post’s claims, revealing it to be more about eliminating federal regulations for corporate greed.
All this is part of a larger trend questioning the ability of federal agencies to create and enforce regulations.
To be sure, an argument can be made for more effective federal regulations and less bureaucratic red tape. But this case is pushing for the emergence of a laissez-faire Wild West where workers and communities lose the protective benefit that decades of federal regulations have provided.
Therefore, ethicists, policymakers and people of good faith need to speak out about the implications of this summer’s SCOTUS rulings.
Senior Staff Chaplain and Clinical Ethicist at the Baptist Health Medical Center in Little Rock, Arkansas.
