On Tuesday, TCF National Bank, one of the nation's largest debit card issuers, announced that it had filed suit challenging the constitutionality of the so-called "Durbin amendment" to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) "on three separate grounds: the regulations take our property without just compensation and without Due Process of Law; and they also deny us Equal Protection under the law."

The Durbin amendment (i) requires that interchange transaction fees received or charged by an issuerin connection with a debit card transaction must be “reasonable and proportional” to the incremental cost to the issuer of processing the transaction (subject to exemptions for small issuers and for qualifying general use reloadable prepaid cards and government-administered benefit cards); (ii) directs the Federal Reserve to enact regulations establishing standards for assessing whether a debit card interchange transaction fee is reasonable and proportional to the issuer’s costs of processing the transaction, subject to permissible adjustments the Federal Reserve deems necessary to allow the issuer to recover its fraud prevention costs; (iii) authorizes the Federal Reserve to regulate payment card network fees to the extent necessary to ensure such network fees are not used to compensate issuers for debit card transactions or to circumvent the interchange transaction fee amount restrictions; and (iv) proscribes certain payment card network rules and practices perceived to increase merchant costs and limit merchant control over the acceptance of debit cards.

TCF asserts that the Durbin amendment "explicitly mandates that the Federal Reserve Board ignore other costs [besides processing costs of authorizing, clearing and settling debit card transactions] incurred by banks associated with the creation, administration and improvement of their extensive, highly efficient, debit card systems." TCF also objects to the broad exemption of banks with less than $10 billion in assets, which it assets will allow "thousands of banks exempted from the Amendment ... to continue to charge retailers the current debit card interchange rate and recover all their cost plus a profit," resulting in "an irrational competitive disadvantage for banks like TCF that are subject to the new regulations."