No court can fix a broken foundation: The Durbin Amendment’s flaw 40%
By Leah Locke0%
7/16/2026, 1:00:00 PM
BS Summary: This article contains 26 faulty reasoning types, including Biased Writer Voice, Negativity Bias, and Hasty Generalization, with Post Hoc (False Cause) as the most egregious example at 17.9% saturation with 133 hits. Analysis detected 1,349 faulty-reasoning hits from 744 analyzed words, generating a BS Score of 44.9% and a BS Rank of 40% (13,272 of 21,887 articles). This article is better (less manipulative) than 60.60% of the article peer group.
Within a month, two U.S. district judges ruled in cases challenging swipe fee regulation .
Both lawsuits were brought against the Federal Reserve over its implementation of the Durbin Amendment.
Back-to-back lawsuits point to fundamental issues with the underlying law.
When the law distorts a market, nothing built on top of it can ever stand securely.
The Durbin Amendment, passed in 2010 under the Dodd-Frank Act, capped debit card interchange fees, which are charged whenever a card is used at checkout.
The limit is set through rulemaking by the Board of Governors of the Fed.
Known as Regulation II, the board’s rule caps these fees at $0.21, allowing for another 0.05% of the transaction cost (ad valorem) and a $0.01 adjustment for fraud prevention.
The rule only applies to large issuers with $10 billion or more in assets.
While seemingly straightforward, Regulation II has faced several legal challenges.
After opening for business in 2018, Corner Post, a convenience store in North Dakota, joined a suit initially brought by two trade associations against the board in 2021 for “arbitrary and capricious” fees in Regulation II.
However, the district court dismissed the suit for expired statute of limitations.
Corner Post filed a petition to which the Supreme Court granted a review.
The court ruled that accrual for the statute of limitations began when the rule affected Corner Post rather than when the rule was first enacted.
This left the second part of Corner Post’s case to be reviewed: Did the board correctly interpret the Durbin Amendment when setting the fees, specifically the costs?
U.S.
District Judge Daniel M.
Traynor concluded, “the Court will vacate Regulation II … because it is contrary to law and was promulgated in excess of the Board’s authority.”
However, in the lawsuit brought by Linney’s Pizza against the board due to “improper costs” in the fee calculation, a U.S. district court in Kentucky concluded that the Durbin Amendment was written in such a way that there was an expectation of fees to be decided, rather than no fees at all, siding with the interpretation by the board.
Differing decisions highlight the subjectivity in the law.
According to the law, these costs are to be “reasonable and proportional to the cost incurred by the issuer.”
However, such guidance is open to broad interpretation.
According to Sen.
Dick Durbin (D-IL), after whom the amendment was named and who filed his own amicus brief in support of Linney’s Pizza, “The Durbin Amendment was carefully crafted to give the Board specific directives, not the broad discretion the Board claims.”
The lack of consensus between the judges, merchants, and the author of the legislation further complicates the battle over interchange fees.
The law is flawed because it attempts to regulate what should be a free-market process.
The Durbin Amendment was passed, in Durbin’s own words, “because American consumers and businesses deserve a debit system that is efficient, subject to competitive market forces, and free from excessively high network-established interchange fees.”
But this is not efficient, as seen through the court cases, and it has failed to silence merchant complaints over debit interchange fees.
Whether the board, or the court, decides the interchange fees, neither merchants nor card issuers will be satisfied with the outcome because they have contrary interests.
Free-market competition is still the best way to handle such situations.
However, rather than providing more competition and more choice, the Durbin Amendment only distorted the market and harmed consumers.
Evidence shows that banks reduced free checking accounts, new banking fees were introduced, and banks have shifted to focusing on prime customers, leaving out less profitable customers, following the bill’s enactment.
Even supposed savings from lower interchange fees failed to reach consumers.
One report cited that a year after the rule took place, 21.6% of merchants raised their prices.
When government sets prices, the market cannot work, causing distortion and requiring new laws and rules to adjust for other unseen consequences.
Therefore, there are two options to be considered.
The first option is that the law can be amended to define interchange fees, removing ambiguous language in the amendment.
The second option, and better yet, the law should be repealed, leaving fees up to market signals.
A micromanaged market requires micromanaged upkeep that never satisfies.
Leah Locke is a policy analyst with the American Consumer Institute, a nonprofit education and research organization.
Follow Leah on X @leahmlocke.
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