[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1060 Introduced in House (IH)]







107th CONGRESS
  1st Session
                                H. R. 1060

   To amend the Truth in Lending Act to prohibit unfair or deceptive 
          creditor acts or practices, 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, 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 prohibit unfair or deceptive 
          creditor acts or practices, 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 Card Predatory Practices 
Prevention Act of 2001''.

SEC. 2. PROHIBITION ON UNFAIR OR DECEPTIVE CREDITOR ACTS OR PRACTICES 
              IN SOLICITATIONS FOR CREDIT CARDS.

    (a) In General.--Section 127 of the Consumer Credit Protection Act 
(15 U.S.C. 1637) is amended by adding at the end the following new 
subsection:
    ``(h) Unfair or Deceptive Creditor Acts and Practices.--
            ``(1) In general.--In the case of a credit card account 
        under an open-end consumer credit plan, a creditor shall not 
        engage in an unfair or deceptive act or practice.
            ``(2) Board definition of unfair or deceptive creditor act 
        or practice.--The Board shall, in regulations, define what 
        constitutes an unfair or deceptive creditor act or practice in 
        violation of this subsection.
            ``(3) Specific acts and practices are unfair and 
        deceptive.--For purposes of such regulations, a creditor shall 
        be determined to have engaged in an unfair and deceptive act or 
        practice if--
                    ``(A) in connection with any solicitation to open a 
                credit card account for any consumer under an open end 
                consumer credit plan, the creditor--
                            ``(i) requires a consumer to pay an 
                        application, processing or other fee as a 
                        condition for applying for a credit card 
                        account, or in advance of receiving the 
                        disclosures required by this section;
                            ``(ii) requires a consumer to purchase any 
                        membership, product or service, including any 
                        credit protection, credit analysis, or credit 
                        education product or service, as a condition 
                        for receiving a credit card account;
                            ``(iii) represents that the credit card 
                        account does not require an annual fee, when 
                        the consumer is required to pay an enrollment 
                        fee, membership fee, or any form of service fee 
                        on a recurring basis;
                            ``(iv) represents that a consumer is pre-
                        approved, guaranteed approval, or otherwise has 
                        met the creditor's underwriting standards to 
                        qualify for a specific offer of credit, when 
                        the consumer does not meet the standards for 
                        such credit, no such standards exist, or the 
                        solicitation constitutes only an invitation to 
                        apply for credit or anything other than a firm 
                        offer of credit to the consumer;
                            ``(v) represents that a consumer qualifies 
                        to receive, or qualifies to apply to receive, a 
                        credit card account, in which any stated term, 
                        including the line of credit amount, annual 
                        interest rate, annual fee amount or other 
                        term--
                                    ``(I) is not available to the 
                                consumer upon initiation of the 
                                account, but is made available, or is 
                                intended at the time of the 
                                representation to be made available, in 
                                installments over time in response to 
                                the consumer's positive record of 
                                credit use and payment;
                                    ``(II) is an annual interest rate 
                                or other term the issuer no longer 
                                makes available as part of credit card 
                                accounts for which the consumer 
                                qualifies, or that the issuer has 
                                reason to know will no longer be 
                                available to such consumer prior to the 
                                expiration of such period, as defined 
                                by regulation, that permits reasonable 
                                time for consumer response to the 
                                solicitation; and
                                    ``(III) is an annual interest rate 
                                or other term that the issuer makes 
                                available only to selected consumers, 
                                or to consumers with preferred credit 
                                scores or ratings;
                            ``(vi) represents that a credit card 
                        account provides for credit protection, 
                        overdraft protection, travel insurance, or 
                        other account-related benefits and services 
                        that the issuer makes available separately, and 
                        at additional charge, to card holders; or
                            ``(vii) issues a credit card account to a 
                        consumer who has responded to a direct 
                        solicitation, the account terms of which are 
                        materially different, in terms of being less 
                        favorable to the consumer, than the terms 
                        included in the solicitation that resulted in 
                        the consumer's application;
                    ``(B) in administering a credit card account for 
                any consumer under an open end consumer credit plan, 
                the creditor--
                            ``(i) enrolls a consumer in paid 
                        memberships or in any account-related 
service or program, including credit insurance or credit protection, 
without the clear and unambiguous consent of the consumer after 
receiving complete disclosure of the terms and conditions for such 
membership, service, or program, as provided in regulation;
                            ``(ii) posts a charge or debit to a 
                        consumer's account for any product, service, or 
                        membership without the clear and unambiguous 
                        consent of the consumer after receiving 
                        complete disclosure of the terms and conditions 
                        for such membership, service, or program, as 
                        provided in regulation;
                            ``(iii) engages in a pattern or practice 
                        of--
                                    ``(I) failing to mail the initial 
                                periodic statement required under 
                                subsection (b) of this section, or 
                                delaying or withholding any subsequent 
                                periodic statement, for the purpose, or 
                                with the effect, of causing the 
                                consumer to incur late payment fees or 
                                other fees or penalties, or additional 
                                interest charges with respect to such 
                                account;
                                    ``(II) scheduling payment due dates 
                                in periodic statements to coincide with 
                                holidays, weekend days, or other days 
                                that the creditor is not open for 
                                business, or otherwise not available to 
                                receive or process billing payments, 
                                for the purpose, or with the effect, of 
                                causing the consumer to incur late 
                                payment fees or other penalties or 
                                additional interest charges with 
                                respect to the account; or
                                    ``(III) withholding the posting of 
                                payments to a credit card account 
                                received on or before the payment due 
                                date stated in periodic statements for 
                                the purpose, or with the effect, of 
                                causing the consumer to incur late 
                                payment fees or other penalties or 
                                additional interest charges with 
                                respect to such account;
                            ``(iv) increases the annual interest rate 
                        on a credit card account, or removes or 
                        increases any introductory interest rate 
                        applicable to such account, for reasons other 
                        than actions or omissions of the card holder 
                        that are directly related to such account, 
                        which shall be clearly and conspicuously 
                        described to the card holder in the information 
                        required to be disclosed under subsection (a), 
                        and then only after the consumer has been 
                        provided with appropriate notice, as provided 
                        in regulation; or
                            ``(v) subject to paragraph (5), refuses to 
                        cancel or close a credit card account upon the 
                        request of a consumer; or
                    ``(C) the creditor engages in any other practice 
                that the Board shall determine, by regulation or order, 
                to be unfair, deceptive, intended to misrepresent or 
                confuse the terms of a credit offer, or designed to 
                evade the provisions of this subsection.
            ``(4) Notice to consumer of failure to qualify.--The Board 
        shall prescribe regulations for procedures under which the 
        creditor shall provide notice to any consumer of--
                    ``(A) any failure of the consumer to qualify for an 
                extension of credit or a credit card under the terms 
                and conditions in an offer or solicitation and the 
                reasons for such failure to qualify;
                    ``(B) the terms of a credit card account, if any, 
                that the consumer is qualified to receive, which shall 
                include all disclosures required under subsection 
                (c)(1) and shall meet all requirements of this section; 
                and
                    ``(C) the procedures required of the consumer to 
                receive, or to apply to receive, the credit card 
                account disclosed under subparagraph (B).
            ``(5) Procedures for cancellation.--A creditor may define 
        procedures for requesting cancellation of an account, which 
        shall be clearly described in the information required to be 
        disclosed under subsection (a) and shall be reasonable.''.
    (b) Improved Enforcement Authority.--Section 127 of the Consumer 
Credit Protection Act (15 U.S.C. 1637) is amended by inserting after 
subsection (h) (as added by subsection (a) of this section) the 
following new subsection:
    ``(i) State Action for Violations.--
            ``(1) Authority of the states.--In addition to such other 
        remedies as are provided under State law, if the attorney 
        general of a State, or an officer authorized by the State, has 
        reason to believe that any creditor has violated or is 
violating subsection (h), the State may--
                    ``(A) bring an action on behalf of the residents of 
                the State to enjoin such violation in any appropriate 
                United States district court or in any other court of 
                competent jurisdiction; and
                    ``(B) bring an action on behalf of the residents of 
                the State to enforce compliance with subsection (h), to 
                obtain damages, restitution, or other compensation on 
                behalf of the residents of such State, or to obtain 
                such further and other relief as the court may deem 
                appropriate.
            ``(2) Rights of federal agencies.--
                    ``(A) Notice.--The State shall serve prior written 
                notice of any action commenced under paragraph (1) with 
                respect to any depository institution upon the Federal 
                agency described in subsection (a) or (c) of section 
                108 with respect to such creditor and shall provide 
                such agency with a copy of the complaint unless such 
                prior notice is not feasible, in which case the State 
                shall serve such notice immediately upon instituting 
                such action.
                    ``(B) Intervening action.--Any agency described in 
                subsection (a) or (c) of section 108 which receives a 
                notice from a State under subparagraph (A) with respect 
                to any action described in such subparagraph shall have 
                the right--
                            ``(i) to move to stay the action, pending 
                        the final disposition of a pending Federal 
                        matter as described in paragraph (4);
                            ``(ii) to intervene in an action under 
                        paragraph (1);
                            ``(iii) upon so intervening, to be heard on 
                        all matters arising therein;
                            ``(iv) to remove the action to the 
                        appropriate United States district court; and
                            ``(v) to file petitions for appeal.
            ``(3) Investigatory powers.--For purposes of bringing any 
        action under this subsection, nothing in this subsection shall 
        prevent the attorney general, or officers of such State who are 
        authorized by such State to bring such actions, from exercising 
        the powers conferred on the attorney general or such officers 
        by the laws of such State to conduct investigations or to 
        administer oaths or affirmations or to compel the attendance of 
        witnesses or the production of documentary and other evidence.
            ``(4) Limitation on state action while federal action is 
        pending.--If any Federal agency described in subsection (a) or 
        (c) of section 108 has instituted an enforcement action for a 
        violation of subsection (h), no State may, during the pendency 
        of such action, bring an action under this subsection against 
        any creditor named in the enforcement action for any violation 
        of subsection (h) that is alleged in that action.''.
    (c) Effective Date of Regulations.--
            (1) Publication of final regulations.--Notwithstanding 
        section 105(d) of the Truth in Lending Act, the Board of 
        Governors of the Federal Reserve System shall publish in final 
        form in the Federal Register before the end of the 6-month 
        period beginning on the date of the enactment of this Act any 
        regulations required under the amendments made by subsection 
        (a) or (b) and such regulations as the Board determines to be 
        appropriate to implement such amendments.
            (2) Effective date.--The regulations published in final 
        form in accordance with paragraph (1) shall take effect not 
        later than 90 days after the date of such publication.
                                 <all>