[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1052 Introduced in House (IH)]
107th CONGRESS
1st Session
H. R. 1052
To amend the Truth in Lending Act to enhance consumer disclosures
regarding credit card terms and charges, to restrict issuance of credit
cards to students, to expand protections in connection with unsolicited
credit cards and third-party checks and to protect consumers from
unreasonable practices that result in unnecessary credit costs or loss
of credit, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 15, 2001
Mr. LaFalce (for himself, Mrs. Maloney of New York, Mr. Gutierrez, Ms.
Lee, Mrs. Jones of Ohio, Mr. Capuano, Mr. Clay, Mr. Hinchey, Mr.
Bonior, Mr. George Miller of California, Ms. DeLauro, Mr. Delahunt, and
Ms. Schakowsky) introduced the following bill; which was referred to
the Committee on Financial Services
_______________________________________________________________________
A BILL
To amend the Truth in Lending Act to enhance consumer disclosures
regarding credit card terms and charges, to restrict issuance of credit
cards to students, to expand protections in connection with unsolicited
credit cards and third-party checks and to protect consumers from
unreasonable practices that result in unnecessary credit costs or loss
of credit, 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.
(a) Short Title.--This Act may be cited as the ``Consumer Credit
Card Protection Amendments of 2001''.
(b) Reference.--Whenever in this Act an amendment or repeal is
expressed in terms of an amendment to, or repeal of, a section or other
provision, the reference shall be considered to be made to a section or
other provision of the Consumer Credit Protection Act (15 U.S.C. 1601
et seq.).
SEC. 2. DISCLOSURES REGARDING MINIMUM MONTHLY PAYMENTS.
(a) In General.--Section 127(a)(3) of the Consumer Credit
Protection Act (15 U.S.C. 1637(a)(3)) is amended by inserting before
the period at the end the following: ``, or the method of determining
the required minimum payment amount, if a minimum payment is required
that is different from the amount of any finance charge, and the
charges or penalties, if any, which may be imposed for failure by the
obligor to pay the required finance charge or minimum payment amount''.
(b) Repayment Information.--Section 127(b) (15 U.S.C. 1637(b)) is
amended by adding at the end the following:
``(11) In a clear and conspicuous manner, repayment
information that would apply to the outstanding balance of the
consumer under the credit plan, including--
``(A) the required minimum monthly payment on that
balance, represented as both a dollar figure and a
percentage of that balance;
``(B) the number of months (rounded to the nearest
month) that it would take to pay the entire amount of
that current balance if the consumer pays only the
required minimum monthly payments and if no further
advances are made;
``(C) the total cost to the consumer, including
interest and principal payments, of paying that balance
in full if the consumer pays only the required minimum
monthly payments and if no further advances are made;
and
``(D) the following statement: `If your current
rate is a temporary introductory rate, your total costs
may be higher.'''.
(c) Minimum Payment Amount.--Section 127(c)(1)(A) (15 U.S.C.
1637(c)(1)(A)) is amended by adding at the end the following new
clause:
``(v) Minimum payment amount.--The method
for determining the required minimum payment
amount to be paid for each billing cycle, and
the charge or penalty, if any, to be imposed
for any failure by the obligor to pay the
required minimum payment amount.''.
SEC. 3. INTERNET-BASED CREDIT CARD SOLICITATIONS.
Section 127(c) (15 U.S.C. 1637(c)) is amended--
(1) by redesignating paragraphs (3), (4), and (5) as
paragraphs (4), (5), and (6), respectively; and
(2) by inserting after paragraph (2) the following new
paragraph:
``(3) Internet-based applications and solicitations.--
``(A) In general.--In any Internet-based
solicitation to open a credit card account for any
person under an open end consumer credit plan, the
person making the solicitation shall clearly and
conspicuously disclose the following--
``(i) the information described in
subparagraphs (A) and (B) of paragraph (1); and
``(ii) the disclosures in paragraph (6).
``(B) Form of disclosure.--The disclosures required
by subparagraph (A) shall--
``(i) be readily accessible to consumers in
close proximity to the solicitation to open a
credit card account; and
``(ii) be updated regularly to reflect the
current policies, terms, and fee amounts
applicable to the credit card account.
``(C) Definitions.--For purposes of this paragraph,
the following definitions shall apply:
``(i) Internet.--The term `Internet' means
the international computer network of both
Federal and nonfederal interoperable packet
switched data networks.
``(ii) Interactive computer service.--The
term `interactive computer service' means any
information service, system, or access software
provider that provides or enables computer
access by multiple users to a computer server,
including specifically a service or system that
provides access to the Internet and such
systems operated or services offered by
libraries or educational institutions.''.
SEC. 4. DISCLOSURES RELATED TO ``TEASER RATES''.
Section 127(c) (15 U.S.C. 1637(c)) is amended--
(1) by redesignating paragraph (6) (as so redesignated by
section 3 of this Act) as paragraph (7); and
(2) by inserting after paragraph (5) (as so redesignated by
section 3 of this Act) the following new paragraph:
``(6) Additional notice concerning `teaser rates'.--
``(A) In general.--If any application or
solicitation for a credit card for which a disclosure
is required under this subsection offers, for an
introductory period of less than 1 year, an annual
percentage rate of interest which--
``(i) is less than the annual percentage
rate of interest which will apply after the end
of such introductory period; or
``(ii) in the case of an annual percentage
rate which varies in accordance with an index,
which is less than the current annual
percentage rate under the index which will
apply after the end of such period,
the application or solicitation shall contain the
disclosure contained in subparagraph (B) or (C), as
appropriate.
``(B) Fixed annual percentage rate.--If the annual
percentage rate which will apply after the end of the
introductory period will be a fixed rate, the
application or solicitation shall include the following
disclosure: `The annual percentage rate of interest
applicable during the introductory period is not the
annual percentage rate which will apply after the end
of the introductory period. The permanent annual
percentage rate will apply after [insert applicable
date] and will be [insert applicable percentage
rate].'.
``(C) Variable annual percentage rate.--If the
annual percentage rate which will apply after the end
of the introductory period will vary in accordance with
an index, the application or solicitation shall include
the following disclosure: `The annual percentage rate
of interest applicable during the introductory period
is not the annual percentage rate which will apply
after the end of the introductory period. The permanent
annual percentage rate will be determined by an index
and will apply after (insert date). If the index which
will apply after such date were applied to your account
today, the annual percentage rate would be [insert
applicable percentage rate].'.
``(D) Conditions for introductory rates.--If the
annual percentage rate of interest which will apply
during the introductory period described in
subparagraph (A) is revocable or otherwise conditioned
upon any action by the obligor, including any failure
by the obligor to pay the minimum payment amount or
finance charge or to make any payment by the stated
monthly payment due date, the application or
solicitation shall include the following disclosures:
``(i) the conditions that the obligor must
meet to retain the annual percentage rate of
interest during the introductory period; and
``(ii) the annual percentage rate of
interest that will apply as a result of the
failure of the obligor to meet such conditions.
``(E) Form of disclosure.--The disclosures required
under this paragraph shall be made in a clear and
conspicuous manner in a form at least as prominent as
the disclosure of the annual percentage rate of
interest which will apply during the introductory period.''.
SEC. 5. LIMIT ON INACTIVITY FEES.
Section 127 (15 U.S.C. 1637) is amended by adding at the end the
following new subsection:
``(h) Limit on Inactivity Fees.--In the case of any credit card
account under an open-end consumer credit plan, a creditor may not
impose a fee based on inactivity for the account during any period in
which no advances have been made, if the obligor maintains any
outstanding balance and is charged a finance charge applicable to such
balance.''.
SEC. 6. ISSUANCE OF CREDIT CARDS TO UNDERAGE CONSUMERS.
Section 127(c) (15 U.S.C. 1637(c)) is amended--
(1) by redesignating paragraph (7) (as so redesignated by
section 4 of this Act) as paragraph (8); and
(2) by inserting after paragraph (6) (as added by section 4
of this Act) the following new paragraph:
``(7) Applications from underage consumers.--
``(A) Prohibition on issuance.--No credit card may
be issued to, or open end credit plan established on
behalf of, any consumer who has not attained the age of
21, except in response to a written request or
application to the card issuer that meets the
requirements of subparagraph (B).
``(B) Application requirements.--An application to
open a credit card account by a consumer who has not
reached the age of 21 as of the date of submission of
the application shall require--
``(i) the signature of the parent or
guardian of the consumer indicating joint
liability for debts incurred by the consumer in
connection with the account before the consumer
has reached the age of 21; or
``(ii) submission by the consumer of
financial information indicating an independent
means of repaying any obligation arising from
the proposed extension of credit in connection
with the account.''.
SEC. 7. PENALTIES FOR ON-TIME PAYMENT PROHIBITED.
Section 127 (15 U.S.C. 1637) is amended by inserting after
subsection (h) (as added by section 5 of this Act) the following new
subsection:
``(i) Penalties for On-Time Payment Prohibited.--
``(1) In general.--In the case of any credit card account
under an open-end consumer credit plan, no creditor may cancel
an account, impose a minimum finance charge for any period
(including any annual period), impose any fee in lieu of a
minimum finance charge, or impose any other charge or penalty
with regard to such account or credit extended under such
account solely on the basis that any credit extended has been
repaid in full before the end of any grace period applicable
with respect to the extension of credit.
``(2) Payment due dates.--For purposes of paragraph (1), a
creditor shall be deemed to have imposed a prohibited charge or
penalty on an account under an open end consumer credit plan if
the creditor regularly transmits to the obligor of such plan a
statement for a billing cycle in which credit has been extended
under such plan that includes a payment due date as required by
subsection (b)(9) of this section--
``(A) that is different from and in advance of--
``(i) the date by which payment must be
made for any credit extended under such credit
plan to avoid incurring a finance change that
was disclosed to such obligor pursuant to
subsection (c)(1)(A)(iii) of this section; or
``(ii) the actual date by which payment
would otherwise have to be made to avoid
incurring a finance charge if calculated on the
same basis as the date by which or the period
within which any payment must be made to avoid
incurring a finance charge that was disclosed
to such obligor pursuant to subsection
(c)(1)(A)(iii); and
``(B) that has the purpose or effect of inducing
the obligor of such plan to transmit payment to the
creditor earlier than what otherwise would be required
to avoid incurring a finance charge.
``(3) Scope of application.--Paragraph (1) shall not be
construed as--
``(A) prohibiting the imposition of any flat annual
fee which may be imposed on the consumer in advance of
any annual period to cover the cost of maintaining a
credit card account during such annual period without regard to whether
any credit is actually extended under such account during such period;
or
``(B) otherwise affecting the imposition of the
actual finance charge applicable with respect to any
credit extended under such account during such annual
period at the annual percentage rate disclosed to the
consumer in accordance with this title for the period
of time any such credit is outstanding.''.
SEC. 8. FREEZE ON INTEREST RATE TERMS AND FEES ON CANCELED CARDS.
Section 127 (15 U.S.C. 1637) is amended by inserting after
subsection (i) (as added by section 7 of this Act) the following new
subsection:
``(j) Freeze on Interest Rate Terms and Fees on Canceled Cards.--
``(1) Advance notice of increase in interest rate
required.--In the case of any credit card account under an
open-end consumer credit plan, no increase in any annual
percentage rate of interest (other than an increase due to the
expiration of any introductory percentage rate of interest or
due solely to a change in another rate of interest to which
such rate is indexed) applicable to any outstanding balance of
credit under such plan may take effect before the beginning of
the billing cycle which begins not less than 15 days after the
obligor receives notice of such increase.
``(2) Increase not effective for canceled accounts.--If an
obligor referred to in paragraph (1) cancels the credit card
account before the beginning of the billing cycle referred to
in such paragraph--
``(A) an annual percentage rate of interest
applicable after the cancellation with respect to such
outstanding balance on such account as of the date of
cancellation may not exceed any annual percentage rate
of interest applicable with respect to such balance
under the terms and conditions in effect before the
increase referred to in paragraph (1); and
``(B) the repayment of such outstanding balance
after the cancellation shall be subject to all other
terms and conditions applicable with respect to such
account before the increase referred to in such
paragraph.
``(3) Notice of right to cancel.--The notice referred to in
paragraph (1) with respect to an increase in any annual
percentage rate of interest shall be made in a clear and
conspicuous manner and shall contain a brief statement of the
right of the obligor--
``(A) to cancel the account before the effective
date of the increase; and
``(B) after such cancellation, to pay any balance
outstanding on such account at the time of cancellation
in accordance with the terms and conditions in effect
before the cancellation.''.
SEC. 9. DISCLOSURE OF INTEREST RATES AND FEES ON CREDIT ADVANCES
THROUGH THIRD-PARTY CHECKS.
Section 127 (15 U.S.C. 1637) is amended by inserting after
subsection (j) (as added by section 8 of this Act) the following new
subsection:
``(k) Fees and Interest Rates on Credit Advances Through the Use of
Third-Party Checks.--
``(1) In general.--In the case of any credit card account
under an open-end consumer credit plan, a creditor may not
provide the obligor with any negotiable or transferable
instrument for use in making an extension of credit to the
obligor for the purpose of making a transfer to a third party,
unless the creditor has fully satisfied the notice requirements of
paragraph (2) with respect to such instrument.
``(2) Notice requirements.--A creditor meets the notice
requirements of this paragraph with respect to an instrument
referred to in paragraph (1) if the creditor provides to an
obligor, at the same time any such instrument is provided, a
notice which prominently and specifically describes--
``(A) the amount of any transaction fee which may
be imposed for making an extension of credit through
the use of such instrument, including the exact
percentage rate to be used in determining such amount
if the amount of the transaction fee is expressed as a
percentage of the amount of the credit extended; and
``(B) any annual percentage rate of interest
applicable in determining the finance charge for any
such extension of credit, if different from the finance
charge applicable to other extensions of credit under
such account.''.
SEC. 10. PROHIBITION ON OVER-THE-LIMIT FEES FOR CREDITOR-APPROVED
TRANSACTIONS.
Section 127 (15 U.S.C. 1637) is amended by inserting after
subsection (k) (as added by section 9 of this Act) the following new
subsection:
``(l) Limitation on Imposition of Over-the-Limit Fees.--In the case
of any credit card account under an open-end consumer credit plan, a
creditor may not impose any fees on the obligor for any extension of
credit in excess of the amount of credit authorized to be extended with
respect to such account if the extension of credit is made in
connection with a credit transaction which the creditor approves in
advance or at the time of the transaction.''.
SEC. 11. REQUIREMENTS RELATING TO LATE PAYMENT DEADLINES AND PENALTIES.
Section 127 (15 U.S.C. 1637) is amended by inserting after
subsection (l) (as added by section 10 of this Act) the following new
subsection:
``(m) Requirements Relating to Late Payment Deadlines and
Penalties.--
``(1) Late payment deadline and postmark date required to
be disclosed.--In the case of a credit card account under an
open-end credit plan under which a late fee or charge may be
imposed due to the failure of the obligor to make payment on or
before the due date for such payment, the periodic statement
required under subsection (b) with respect to such account
shall include, in a conspicuous location on the billing
statement, the following:
``(A) The date the payment is due or, if different,
the date on which a late payment fee will be charged,
together with the amount of the fee or charge to be
imposed if payment is made after such date.
``(B) The date by which the payment must be
postmarked, if paid by mail, in order to avoid the
imposition of a late payment fee with respect to such
payment.
``(C) A statement that no late fee may be imposed
in connection with a payment made by mail which was
postmarked on or before such postmark date.
``(2) Disclosure of increase in interest rates for late
payments.--If 1 or more late payments under a credit card
account described in paragraph (1) may result in an increase in
the annual percentage rate applicable to any outstanding
balance on such account, the statement required under
subsection (b) with respect to such account shall include
conspicuous notice of such fact, together with the applicable
penalty annual percentage rate, in close proximity to the
disclosure required in paragraph (1) of the date payment is due
under such account.
``(3) Requirements relating to postmark date.--
``(A) In general.--The date included in a periodic
statement pursuant to paragraph (1)(B) with regard to
the postmark on a payment shall allow, in accordance
with regulations prescribed by the Board under
subparagraph (B), a reasonable time for the consumer to
make the payment and a reasonable time for the delivery
of the payment by the date referred to in paragraph
(1).
``(B) Board regulations.--The Board shall prescribe
guidelines for determining reasonable period for making
a payment and delivery of a payment for purposes of
subparagraph (A), after consultations with the
Postmaster General and representatives of consumer and
trade organizations.
``(4) Payment at local branches.--If the creditor, in the
case of a credit card account referred to in paragraph (1), is
a financial institution which maintains branches or offices at
which payments on any such account are accepted from the
obliger in person, the date on which the obliger makes a
payment on the account at such branch or office shall be
considered as the date on which the payment is made for
purposes of determining whether a late fee or charge may be
imposed due to the failure of the obligor to make payment on or
before the due date for such payment, to the extent such
payment is made before the close of business of the branch or
office on the business immediately preceding the due date for
such payment.''
SEC. 12. PROHIBITION ON TWO-CYCLE BILLING.
Section 127 (15 U.S.C. 1637) is amended by inserting after
subsection (m) (as added by section 11 of this Act) the following new
subsection:
``(n) Prohibition on Two-Cycle Billing.--In the case of any credit
card account under an open-end consumer credit plan, if the creditor
provides, with regard to any new extension of credit under such
account, a period during which such extension of credit may be repaid
without incurring a finance charge for such extension of credit, no
finance charge may subsequently be imposed for such period with regard
to any unpaid balance (as of the end of such period) for such extension
of credit.''
SEC. 13. UNSOLICITED DUAL-PURPOSE CARDS.
Section 132 (15 U.S.C. 1642) is amended--
(1) by inserting ``(a) In General.--'' before ``No'' in the
first sentence; and
(2) by adding at the end the following new subsection:
``(b) Certain Cards Included.--For purposes of this section, the
term `credit card' includes any dual purpose or multifunction card,
including a stored-value card, debit card, check card, check guarantee
card, or purchase-price discount card, that is connected with an open
end credit plan and can be used, either on issuance or upon later
activation, to obtain credit directly or indirectly.''.
SEC. 14. CIVIL LIABILITY.
Section 130(a) (15 U.S.C. 1640(a)) is amended in the undesignated
paragraph following paragraph (4)--
(1) by striking ``or'' after ``(9)'' in the second
sentence;
(2) by inserting after ``(10)'' in the second sentence the
following: ``, or (11)''; and
(3) by striking the third sentence.
SEC. 15. REGULATIONS.
Before the end of the 6-month period beginning on the date of the
enactment of this Act, the Board of Governors of the Federal Reserve
System shall issue regulations in final form to implement the
amendments made by this Act. The Board of Governors of the Federal
Reserve System shall also issue such staff commentary or publish such
model disclosure statements and forms as the Board considers necessary
to carry out the intent of the amendments made by this Act, to
implement any initiative to prevent the circumvention of the amendments
made by this Act, and to facilitate compliance with the requirements in
the amendments.
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