[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1105 Introduced in House (IH)]

  1st Session
                                H. R. 1105

  To amend the Truth in Lending Act to require additional disclosures 
    with respect to credit card accounts, to require a study of the 
  competitiveness of the credit card industry, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 1, 1995

 Mr. Schumer introduced the following bill; which was referred to the 
              Committee on Banking and Financial Services

_______________________________________________________________________

                                 A BILL


 
  To amend the Truth in Lending Act to require additional disclosures 
    with respect to credit card accounts, to require a study of the 
  competitiveness of the credit card industry, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Credit and Charge Card Disclosure 
and Interest Rate Amendments Act of 1995''.

SEC. 2. FINDINGS.

    The Congress finds that--
            (1) the annual percentage rates applicable to credit 
        balances on credit card accounts have not been responsive to 
        the steady decline in creditors' costs of funds during the 3 
        years preceding the date of the enactment of this Act, as would 
        be expected if the credit card market were truly competitive;
            (2) such annual percentage rates should be reduced; and
            (3) more public disclosure of such annual rates should make 
        the market in credit cards more competitive.

SEC. 3. DISCLOSURE REQUIREMENTS RELATING TO CREDIT CARD ACCOUNTS.

    (a) Statements To Include Better Information Regarding Interest 
Burden.--Section 127(b) of the Truth in Lending Act (15 U.S.C. 1637(b)) 
is amended by adding at the end the following:
            ``(11) In the case of any credit card account under an open 
        end consumer credit plan--
                    ``(A) the total of all amounts paid by the obligor 
                with respect to the account during the current year;
                    ``(B) the total amount of finance charges paid by 
                the obligor with respect to the account during the 
                current year, stated next to the information required 
                by subparagraph (A); and
                    ``(C) the date by which the obligor will complete 
                paying the current outstanding balance of the account 
                (including all finance charges that will be added to 
                the account with respect to that balance in the future) 
                if the obligor pays each month only the minimum amount 
                required to be paid under the plan.''.
    (b) Statements To Include Information Regarding Changes in Terms.--
Section 127 of the Truth in Lending Act (15 U.S.C. 1637) is amended by 
adding at the end the following new subsection:
    ``(h) Statements Required To Include Revised Table of Terms Before 
Change in Terms Is Effective.--In the case of any credit card account 
under an open end consumer credit plan, no change in any term 
applicable to such plan which is described in paragraph (1)(A), (1)(B), 
or (4)(A) of subsection (c) may take effect unless, before the 
effective date of the change, 1 or more of the statements which are 
transmitted pursuant to subsection (b) contain the information 
described in such paragraphs (1)(A), (1)(B), and (4)(A) which is 
applicable to the plan (as in effect after such change) in the tabular 
format required under section 122(c).''.
    (c) Envelopes To Include Tables.--Section 127 of the Truth in 
Lending Act (15 U.S.C. 1637) is amended by adding after subsection (h) 
(as added by subsection (b) of this section) the following new 
subsection:
    ``(i) Envelopes To Contain Information in Tabular Format.--The 
envelope containing any application or solicitation referred to in 
subsection (c)(1)(A) shall contain the information required to be 
included in such application, solicitation, or statement under any such 
subsection in the tabular format required under section 122(c).''.
    (d) Advertising To Include Tables.--Section 143 of the Truth in 
Lending Act (15 U.S.C. 1663) is amended--
            (1) by striking ``No advertisement'' and inserting ``(a) In 
        General.--Subject to subsection (b), no advertisement''; and
            (2) by adding at the end the following new subsection:
    ``(b) Credit Card Accounts.--
            ``(1) In general.--Subject to paragraphs (2) and (3), any 
        advertisement to aid or assist directly or indirectly the 
        extension of consumer credit through a credit card account 
        under an open end consumer credit plan shall include, in a 
        clear and conspicuous disclosure--
                    ``(A) the information described in paragraphs (1) 
                and (2) of subsection (a);
                    ``(B) the information described in paragraphs 
                (1)(A) and (1)(B)(i) of section 127(c) disclosed in the 
                tabular format required under section 122(c); and
                    ``(C) any other information the Board may require 
                in the form prescribed by the Board.
            ``(2) Radio advertising.--Any advertisement described in 
        paragraph (1) which is made by means of any radio broadcast or 
        other audio broadcast or transmission to the public shall 
        include a verbal disclosure of--
                    ``(A) the information described in paragraphs (1) 
                and (2) of subsection (a);
                    ``(B) any fee described in paragraph (1)(A)(ii) or 
                (1)(B)(i) of section 127(c) which is applicable with 
                respect to such account or any transaction under such 
                account; and
                    ``(C) if section 127(c)(1)(A)(iii) is applicable 
                with respect to such account, that fact and the 
                information described in subclause (II) of such 
                section.
            ``(3) Television advertising.--Any advertisement described 
        in paragraph (1) which is made by means of any television 
        broadcast or other video broadcast or transmission to the 
        public shall include the information described in paragraphs 
        (1)(A) and (1)(B)(i) of section 127(c) disclosed clearly and 
        conspicuously in the tabular format required under section 
        122(c).
            ``(4) Exception for promotional advertising.--The 
        provisions of this subsection shall not apply to any 
        advertising which is solely promotional and does not involve 
        any solicitation of business by any creditor.''.
    (e) Separate Disclosure in the ``Schumer Box'' of Rate for Cash 
Advances if Such Rate Differs From Other Rates.--Section 122(c)(2) of 
the Truth in Lending Act (15 U.S.C. 1631(c)(2)) is amended by adding at 
the end the following new subparagraph:
                    ``(D) Rates applicable to cash advances.--If a 
                different annual percentage rate described in section 
                127(c)(1)(A) is applicable to extensions of credit in 
                the form of cash than is applicable to other extensions 
                of credit to which such section applies, the table 
                prescribed by the Board under this subsection shall 
                list such rate separately from other rates and under a 
                separate heading.''.
    (f) Better Disclosure of Grace Period.--Section 127(c)(1)(A)(iii) 
of the Truth in Lending Act (15 U.S.C. 1637(c)(1)(A)(iii)) is amended 
by adding at the end the following:
                                    ``(III) The terms and conditions 
                                under which such `grace period' is 
                                forfeited, stated clearly and in 
                                conspicuous bold print.''.
    (g) Toll-Free Number for Information on Low Rate Credit Cards.--The 
Board of Governors of the Federal Reserve System shall establish, 
maintain, and publicize a toll-free telephone line for consumers to 
call for free information on the availability of low-rate credit cards.
    (h) Technical and Conforming Amendments.--
            (1) Section 122(c) of the Truth in Lending Act (15 U.S.C. 
        1631(c)) is amended by inserting ``and in sections 127(h) and 
        143(b)'' after ``of section 127(c)''.
            (2) The heading for section 122(c) of the Truth in Lending 
        Act (15 U.S.C. 1631(c)) is amended by striking ``Section 
        127(c)'' and inserting ``Sections 127(c), 127(h), and 143(b)''.

SEC. 4. NOTICE AND ELECTION REQUIRED IN CASE OF INCREASE IN RATES UNDER 
              CREDIT CARD ACCOUNTS.

    (a) In General.--Section 127 of the Truth in Lending Act (15 U.S.C. 
1637) is amended by adding after subsection (i) (as added by section 
3(c) of this Act) the following new subsection:
    ``(j) Notice and Consumer Election in Case of Increase in Rates or 
Fees Under Credit Card Accounts.--
            ``(1) Notice required.--
                    ``(A) In general.--No increase in any annual 
                percentage rate applicable to the balance (or any 
                portion of any such balance) outstanding on any credit 
                extended in connection with any credit card account 
                under any open end consumer credit plan, and no change 
                in any term described in paragraph (1)(A) or (1)(B) of 
                subsection (c) which adversely affects the consumer, 
                may take effect before the end of the 30-day period 
                beginning on the date the cardholder receives notice 
                and a description of such increase or change and the 
                procedures for making an election under paragraph (2).
                    ``(B) Form of notice.--Notice to a consumer under 
                subparagraph (A) shall be in the form of the following 
                sentence appearing in conspicuous bold print on the 
                outside of an envelope containing a statement 
                transmitted to the consumer pursuant to subsection (b): 
                `Federal law requires the following notification: The 
                terms of your credit card contract have been changed. 
                Look inside this envelope for important details.'.
                    ``(C) Form of description.--The description 
                required by subparagraph (A) shall be--
                            ``(i) included in an envelope containing a 
                        statement transmitted to the consumer pursuant 
                        to subsection (b) and on which appears a notice 
                        in accordance with subparagraph (B);
                            ``(ii) on a document that is separate from 
                        the statement transmitted pursuant to 
                        subsection (b); and
                            ``(iii) in the tabular format required 
                        under section 122(c).
            ``(2) Election to rescind further use of account.--Any 
        cardholder who receives notice under paragraph (1) with respect 
        to any credit card account under any open end consumer credit 
        plan may notify the creditor that such cardholder is rescinding 
any use of the account to obtain any additional extensions of credit 
under the plan effective upon such notice.
            ``(3) Outstanding balance subject to existing rates upon 
        election.--If any cardholder with respect to any credit card 
        account under any open end consumer credit plan notifies the 
        creditor of the cardholder's election, pursuant to paragraph 
        (2), to rescind the use of the account, any balance outstanding 
        with respect to such account shall be subject to any repayment 
        rate, and any other terms, in effect with respect to such 
        balance on the date the cardholder receives the notice under 
        paragraph (1).
            ``(4) Any subsequent extension of credit negates 
        election.--
                    ``(A) In general.--If any person--
                            ``(i) makes an election under paragraph (2) 
                        to rescind the use of any credit card account 
                        to obtain any extension of credit under any 
                        open end consumer credit plan after the date of 
                        notice pursuant to such election; and
                            ``(ii) after the date of notice of such 
                        election, engages in any transaction with 
                        respect to such account, other than any 
                        transaction in connection with the repayment of 
                        any balance outstanding under the account,
                paragraph (3) shall cease to apply with respect to such 
                balance.
                    ``(B) Liability for forgone interest and finance 
                charges.--Any person referred to in subparagraph (A) 
                shall be liable for any difference between--
                            ``(i) the amount of interest and finance 
                        charges paid by that person on any balance 
                        outstanding under the credit plan referred to 
                        in such subparagraph in accordance with 
                        paragraph (3) since the date of the notice 
                        under paragraph (2); and
                            ``(ii) the amount of such charges the 
                        person would have been required to pay under 
                        the plan but for paragraph (3).''.

SEC. 5. FINANCE CHARGE NOT TO BE IMPOSED BEFORE DATE CHARGE IS POSTED 
              TO CREDIT CARD ACCOUNT.

    (a) In General.--The Truth in Lending Act (15 U.S.C. 1601 et seq.) 
is amended by inserting after section 127A the following:
``Sec. 127B. Limitation on imposing finance charges on certain consumer 
              accounts
    ``No finance charge may be imposed on an extension of credit with 
respect to a credit card account under an open end consumer credit plan 
before the date the extension of credit is posted to the account.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
chapter 2 of the Truth in Lending Act (15 U.S.C. 121 et seq.) is 
amended by inserting after the item relating to section 127A the 
following:

``127B. Limitation on imposing finance charges on certain consumer 
                            accounts.''.

SEC. 6. LIMITATION ON USE OF CREDIT INFORMATION BY ISSUERS OF CREDIT 
              CARDS.

    (a) Limitation.--The Truth in Lending Act (15 U.S.C. 1601 et seq.) 
is amended by inserting after section 127B (as added by section 5) the 
following:
``Sec. 127C. Limitation on use of information by credit card issuers
    ``(a) Limitation.--A card issuer shall not use, sell, or otherwise 
disclose for direct marketing purposes, information regarding the use 
of a consumer credit card issued by the card issuer (including any list 
of cardholders derived from such information) if--
            ``(1) the card issuer has not notified the cardholder in 
        accordance with subsection (b) that the information will be 
        used for those purposes; or
            ``(2) the cardholder has notified the card issuer in 
        accordance with subsection (c) that the cardholder does not 
        consent to the use of that information for those purposes.
    ``(b) Notification by Card Issuer.--
            ``(1) Time.--A card issuer shall notify a cardholder for 
        purposes of subsection (a)(1) in writing--
                    ``(A) before the first transaction is made under 
                the credit card; and
                    ``(B) in at least one billing cycle of each 
                calendar year in which the card issuer is required to 
                send a billing statement to the cardholder under 
                applicable Federal law.
            ``(2) Content.--Each notification under paragraph (1) shall 
        include--
                    ``(A) a clear and conspicuous statement that 
                information regarding the use of the credit card can be 
                disclosed for direct marketing purposes unless the 
                cardholder notifies the card issuer, in writing or, if 
                applicable, by calling any toll free telephone number 
                established by the card issuer for that purpose, that 
                the cardholder does not consent to the use of that 
                information for those purposes;
                    ``(B) an address that the cardholder may write to 
                for purposes of subsection (a)(2); and
                    ``(C) either--
                            ``(i) a postage paid, self-addressed form 
                        which the cardholder may sign and mail to the 
                        card issuer to notify the card issuer for 
                        purposes of subsection (a)(2); or
                            ``(ii) in a clear and conspicuous manner, a 
                        toll free telephone number that the card issuer 
                        establishes for notifying the card issuer for 
                        purposes of subsection (a)(2).
            ``(3) Form.--Each notification under paragraph (1) shall be 
        made on a document that is separate and distinct from any other 
        information with which it is provided to the cardholder.
    ``(c) Notification by Cardholder.--A cardholder may notify a card 
issuer for purposes of subsection (a)(2)--
            ``(1) by calling any toll free telephone number that is 
        established by the card issuer for that purpose;
            ``(2) by signing and mailing to the card issuer any form 
        provided by the card issuer in accordance with subsection (b); 
        or
            ``(3) otherwise in writing to the address provided under 
        subsection (b)(2)(B).
    ``(d) Limited Requirements.--Nothing in this section shall be 
construed or interpreted as a general requirement for credit card 
issuers to notify cardholders. The requirements of subsection (b) are 
established solely to enable credit card issuers to satisfy the 
conditions of subsection (a) for purposes of using cardholder 
information for direct marketing purposes.
    ``(e) Direct Marketing Defined.--For purposes of this section, the 
term `direct marketing' means selling or offering for sale, directly to 
a consumer or a specific group of consumers, a good or service.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
chapter 2 of the Truth in Lending Act (15 U.S.C. 1601 et seq.), as 
amended by this Act, is further amended by inserting after the item 
relating to section 127B (as added by section 5) the following:

``127C. Limitation on use of information by credit card issuers.''.

SEC. 7. STUDY OF COMPETITIVENESS OF CREDIT CARD MARKET.

    (a) Study Required.--The Comptroller General of the United States, 
in consultation with the Board of Governors of the Federal Reserve 
System, shall conduct a study of the market in credit cards to 
determine whether such market is competitive.
    (b) Specific Issues Required To Be Studied.--The study conducted 
pursuant to subsection (a) shall include the following:
            (1) The annual percentage rates of interest on credit 
        extended through credit cards (as defined in section 103(k) of 
        the Truth in Lending Act) during the 66-month period beginning 
        5 years before the date of the enactment of this Act.
            (2) The cost of funds to creditors (as defined in section 
        103(f) of the Truth in Lending Act) for the extension of such 
        credit during such period.
            (3) An analysis of the change in the spread between the 
        cost of such funds to creditors and the annual percentage rates 
        of interest on credit extended through credit cards during such 
        period.
            (4) Whether such factors indicate that competition exists 
        among creditors for new credit card accounts and the degree to 
        which such competition exists among the 10 credit card issuers 
        who have issued the largest number of cards.
            (5) Whether the degree of competition among the 10 credit 
        card issuers who have issued the largest number of cards 
        differs from the degree of competition in--
                    (A) the credit card industry generally; and
                    (B) other consumer loan markets, including housing 
                loans and auto loans.
            (6) If there is a difference in the degree of competition 
        identified in the markets referred to in paragraph (5), the 
        reason for the disparity.
            (7) The competitive barriers to entry into--
                    (A) the credit card market; and
                    (B) the group of 10 credit card issuers having the 
                largest number of credit card accounts.
    (c) Report Required by End of 9-Month Period.--Before the end of 
the 9-month period beginning on the date of the enactment of this Act, 
the Comptroller General shall submit a report to the Congress 
containing--
            (1) the findings and conclusions of the Comptroller General 
        with respect to the study conducted pursuant to subsection (a); 
        and
            (2) such recommendations for legislative or administrative 
        action as the Comptroller General determines to be appropriate.

SEC. 8. REQUIREMENT TO PROVIDE ANNUAL STATEMENTS OF PAYMENTS MADE ON 
              CREDIT CARD ACCOUNTS.

    (a) In General.--Section 127 of the Truth in Lending Act (15 U.S.C. 
1637) is amended by adding after subsection (j) (as added by section 
4(a) of this Act) the following new subsection:
    ``(k) Statements of Costs of Credit Cards.--
            ``(1) Disclosure requirement.--A card issuer under an open 
        end credit plan shall include with the first 3 statements 
        provided in a year under subsection (b) with respect to the 
        plan a separate statement of the total amounts the obligor paid 
        to the card issuer in the preceding year for credit cards 
        issued under the plan--
                    ``(A) as fees or charges described in subsections 
                (c)(4) (A) and (B); and
                    ``(B) as finance charges (other than those referred 
                to in subparagraph (B)).
            ``(2) Tabular format.--
                    ``(A) In general.--The statement required under 
                paragraph (1) shall disclose the fees and charges 
                described in paragraph (1) in the form and manner which 
                the Board shall prescribe by regulations.
                    ``(B) Form of table.--In the regulations required 
                under subparagraph (A), the Board--
                            ``(i) shall require that the disclosure of 
                        fees and charges shall, to the extent the Board 
                        determines to be practicable and appropriate, 
                        be in the form of a table which--
                                    ``(I) contains clear and concise 
                                headings for each item of information 
                                disclosed in the table; and
                                    ``(II) provides a clear and concise 
                                form for stating each item of 
                                information disclosed in the table;
                            ``(ii) may list the items of information 
                        required to be included in the table in a 
                        different order than the order in which the 
                        items are set forth in subsections (c)(4) (A) 
                        and (B); and
                            ``(iii) may use terminology which is 
                        different than the terminology employed in 
                        subsections (c)(4) (A) and (B) if the 
                        terminology used conveys substantially the same 
                        meaning.''.
    (b) Effective Date.--The amendment made by subsection (a) shall be 
effective on the date of publication of final regulations under 
subsection (c).
    (c) Date for Issuance of Regulations.--The Board of Governors of 
the Federal Reserve System shall issue regulations which implement the 
amendment made by subsection (a) by not later than 9 months after the 
date of the enactment of this Act.

SEC. 9. REQUIREMENT TO PROVIDE COPY OF AGREEMENT ESTABLISHING TERMS OF 
              CREDIT CARD ACCOUNT.

    Section 127 of the Truth in Lending Act (15 U.S.C. 1637) is amended 
by adding after subsection (l) (as added by section 8(a) of this Act) 
the following new subsection:
    ``(i) Provision of Copy of Agreement on Request.--A card issuer 
under an open end credit plan shall upon request provide a copy of the 
agreement that establishes the conditions, requirements, and other 
terms of the plan.''.
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