[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1461 Introduced in House (IH)]







110th CONGRESS
  1st Session
                                H. R. 1461

   To amend the Consumer Credit Protection Act to ban abusive credit 
 practices, enhance consumer disclosures, protect underage consumers, 
                        and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 9, 2007

  Mr. Udall of Colorado (for himself and Mr. Cleaver) introduced the 
   following bill; which was referred to the Committee on Financial 
                                Services

_______________________________________________________________________

                                 A BILL


 
   To amend the Consumer Credit Protection Act to ban abusive credit 
 practices, enhance consumer disclosures, protect underage consumers, 
                        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; TABLE OF CONTENTS.

    This Act may be cited as the ``Credit Card Accountability 
Responsibility and Disclosure Act of 2007'' or the ``Credit CARD Act of 
2007''.

SEC. 2. REGULATORY AUTHORITY.

    The Board of Governors of the Federal Reserve System may issue such 
rules or publish such model forms as it considers necessary to carry 
out this Act and the amendments made by this Act, in accordance with 
sections 105 and 122 of the Truth in Lending Act.

         TITLE I--REGULATIONS REGARDING CERTAIN RATES AND FEES

SEC. 101. PRIOR NOTICE OF RATE INCREASES REQUIRED.

    Section 127 of the Truth in Lending Act (15 U.S.C. 1637) is amended 
by adding at the end the following:
    ``(i) Advance Notice of Increase in Interest Rate Required.--
            ``(1) In general.--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)--
                    ``(A) 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; or
                    ``(B) may apply to any outstanding balance of 
                credit under such plan as of the date of the notice of 
                the increase required under paragraph (1).
            ``(2) 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 to cancel the account before the effective 
        date of the increase.''.

SEC. 102. FREEZE ON INTEREST RATE TERMS AND FEES ON CANCELED CARDS.

    Section 127 of the Truth in Lending Act (15 U.S.C. 1637) is amended 
by inserting after subsection (i) (as added by section 101 of this 
title) the following new subsection:
    ``(j) Freeze on Interest Rate Terms and Fees on Canceled Cards.--If 
an obligor referred to in subsection (i) closes or cancels a credit 
card account before the beginning of the billing cycle referred to in 
subsection (h)(1)--
            ``(1) an annual percentage rate of interest applicable 
        after the cancellation with respect to the outstanding balance 
        on the 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 date of the notice of any increase referred to in 
        subsection (i)(1); and
            ``(2) the repayment of the outstanding balance after the 
        cancellation shall be subject to all other terms and conditions 
        applicable with respect to such account before the date of the 
        notice of the increase referred to in subsection (i).''.

SEC. 103. LIMITS ON CHARGES OR FEES FOR TIMELY PAYMENTS OR NON-USE.

    Section 127 of the Truth in Lending Act (15 U.S.C. 1637) is amended 
by inserting after subsection (j) (as added by section 102 of this 
title) the following new subsection:
    ``(k) Limits on Charges or Fees for Timely Payments or Non-Use.--
            ``(1) Prohibition on charges for on-time payments.--In the 
        case of any credit card account under an open end credit plan, 
        where no other balance is owing on the account, no finance or 
        interest charge or other charge may be imposed with regard to 
        any amount of a new extension of credit that was paid on or 
        before the date on which it was due.
            ``(2) Prohibition on cancellation or additional fees for 
        on-time payments or payment in full.--In the case of any credit 
        card account under an open end consumer credit plan, no fee or 
        other penalty may be imposed on the consumer in connection with 
        the payment in full of an existing account balance, or payment 
        of more than the minimum required payment of an existing 
        account balance.
            ``(3) Prohibition on fees for non-use of credit cards.--In 
        the case of any credit card account under an open end consumer 
        credit plan, no fee or other penalty may be imposed on the 
        consumer solely by reason of the consumer's non-use of the card 
        for a purchase or advance during any period.''.

SEC. 104. PROHIBITION ON OVER-THE-LIMIT FEES FOR CREDITOR-APPROVED 
              TRANSACTIONS.

    Section 127 of the Truth in Lending Act (15 U.S.C. 1637) is amended 
by inserting after subsection (k) (as added by section 103 of this 
title) 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. 105. PROHIBITION ON UNIVERSAL DEFAULTS.

    Chapter 4 of the Truth in Lending Act (15 U.S.C. 1666 et seq.) is 
amended--
            (1) by redesignating section 171 as section 173; and
            (2) by adding at the end the following:
``Sec. 171. Universal defaults prohibited
    ``(a) In General.--No credit card issuer may use any adverse 
information unrelated to a cardholder's account with that issuer, 
including any information contained in any consumer report (as defined 
in section 603) or any change in the credit score of the cardholder, as 
the basis for increasing any annual percentage rate of interest 
applicable to a credit card account of the cardholder under an open end 
consumer credit plan, or to remove or increase any introductory annual 
percentage rate of interest applicable to such account.
    ``(b) Exception.--The limitation under subsection (a) shall not 
apply to--
            ``(1) a credit card issuer that increases an annual 
        percentage rate of interest in accordance with a credit card 
        agreement that provides for rate changes according to changes 
        in an index or formula; or
            ``(2) the removal or increase in an introductory annual 
        percentage rate of interest applicable to the usage or payment 
        of such account because of actions or omissions of a consumer 
        that are directly related to such account.
    ``(c) Notice to Consumer.--The limitation under subsection (a) on 
the use of adverse information by a credit card issuer shall be clearly 
and conspicuously described to the consumer by the credit card issuer 
in any disclosure or statement required under subsection (a) or (b) of 
section 127.''.

                TITLE II--ENHANCED CONSUMER DISCLOSURES

SEC. 201. PAYOFF TIMING DISCLOSURES.

    (a) In General.--Section 127(b) of the Truth in Lending Act (15 
U.S.C. 1637(b)) is amended by adding at the end the following new 
paragraph:
            ``(13) Repayment information.--
                    ``(A) In general.--Repayment information that would 
                apply to the outstanding balance of the consumer under 
                the credit plan, including--
                            ``(i) the outstanding balance in the 
                        account at the beginning of the statement 
                        period, as required by paragraph (1) of this 
                        subsection;
                            ``(ii) the required minimum monthly payment 
                        on that balance, represented as both a dollar 
                        figure and as a percentage of that balance, as 
                        well as the portion of such payment that 
                        represents repayment of a balance and what if 
                        any portions represent interest charges and 
                        other charges or fees;
                            ``(iii) the grace period within which 
                        payment must be made to avoid additional 
                        charges, as required by paragraph (9) of this 
                        subsection; and
                            ``(iv) the monthly payments amount that 
                        would be required for the consumer to eliminate 
                        the outstanding balance in 36 months if no 
                        further purchases or advances are made.
                    ``(B) Applicable annual percentage rate.--
                            ``(i) In general.--Subject to clause (ii), 
                        in making the disclosures under subparagraph 
                        (A), the creditor shall apply the annual 
                        percentage rate in effect on the date on which 
                        the disclosure is made until the date on which 
                        the balance would be paid in full.
                            ``(ii) Exception.--If the annual percentage 
                        rate in effect on the date on which the 
                        disclosure is made is a temporary rate that 
                        will change under a contractual provision 
                        applying an index or formula for subsequent 
                        interest rate adjustment, the creditor shall 
                        apply the rate in effect on the date on which 
                        the disclosure is made for as long as that rate 
                        will apply under that contractual provision, 
                        and then apply an annual percentage rate based 
                        on the index or formula in effect on the 
                        applicable billing date.''.
    (b) Tabular Format Required for Disclosures.--Section 122 of the 
Truth in Lending Act (15 U.S.C. 1632) by adding at the end the 
following new subsection:
    ``(d) Format Required for Certain Disclosures Under Section 
127(b)(13).--
            ``(1) Form of disclosure.--All of the information disclosed 
        pursuant to section 127(b)(13)(A) shall--
                    ``(A) be disclosed in the form and manner which the 
                Board shall prescribe by regulations under this section 
                and in accordance with section 105; and
                    ``(B) be placed in a conspicuous and prominent 
                location on the billing statement in typeface that is 
                at least as large as the largest type on the statement, 
                but in no instance less than 12-point in size.
            ``(2) Tabular format.--In the regulations prescribed under 
        paragraph (1), the Board shall require that the disclosure of 
        such information shall be in the form of a table that--
                    ``(A) contains clear and concise headings for each 
                item of such information; and
                    ``(B) provides a clear and concise form stating 
                each item of information required to be disclosed under 
                each such heading.
            ``(3) Requirements regarding location and order of table.--
        In prescribing the form of the table under paragraph (2), the 
        Board shall require that--
                    ``(A) all of the information in the table, and not 
                just a reference to the table, be placed on the billing 
                statement, as required by this subparagraph; and
                    ``(B) the items required to be included in the 
                table shall be listed in the order in which such items 
                are set forth in section 127(b)(13)(A).
            ``(4) Board discretion in prescribing order and wording of 
        table.--In prescribing the form of the table under subparagraph 
        (C), the Board may employ terminology which is different than 
        the terminology which is employed in subparagraph (A), if such 
        terminology is easily understood and conveys substantially the 
        same meaning.''.
    (c) Civil Liability.--Section 130(a) of the Truth in Lending Act 
(15 U.S.C. 1640(a)) is amended, in the undesignated paragraph following 
paragraph (4), by striking the second sentence and inserting the 
following: ``In connection with the disclosures referred to in 
subsections (a) and (b) of section 127, a creditor shall have a 
liability determined under paragraph (2) only for failing to comply 
with the requirements of section 125, 127(a), or paragraph (4), (5), 
(6), (7), (8), (9), (10), or (11) of section 127(b), or for failing to 
comply with disclosure requirements under State law for any term or 
item that the Board has determined to be substantially the same in 
meaning under section 111(a)(2) as any of the terms or items referred 
to in section 127(a), or paragraph (4), (5), (6), (7), (8), (9), (10), 
(11), or (13) of section 127(b).

SEC. 202. REQUIREMENTS RELATING TO LATE PAYMENT DEADLINES AND 
              PENALTIES.

    Section 127 of the Truth in Lending Act (15 U.S.C. 1637) is amended 
by inserting after subsection (l) (as added by section 104 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 consumer 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 the account shall include, in a conspicuous location on the 
        billing statement--
                    ``(A) 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 the 
                payment; and
                    ``(B) a statement that no late fee may be imposed 
                in connection with a payment made by mail which was 
                postmarked on or before the postmark date.
            ``(2) Disclosure of increase in interest rates for late 
        payments.--If 1 or more late payments under an open end 
        consumer credit plan may result in an increase in the annual 
        percentage rate the account, the statement required under 
        subsection (b) with respect to the 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 on which 
        payment is due under the terms of the 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 due date.
                    ``(B) Board regulations.--The Board shall prescribe 
                guidelines for determining a reasonable period of time 
                for making a payment and delivery of a payment for 
                purposes of subparagraph (A), after consultation 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 
        obligor in person, the date on which the obligor 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 that such 
        payment is made before the close of business of the branch or 
        office on the business day immediately preceding the due date 
        for such payment.''.

                TITLE III--PROTECTION OF YOUNG CONSUMERS

SEC. 301. EXTENSIONS OF CREDIT TO UNDERAGE CONSUMERS.

    Section 127(c) of the Truth in Lending Act (15 U.S.C. 1637(c)) is 
amended by adding at the end the following new paragraph:
            ``(8) Applications from underage consumers.--
                    ``(A) Prohibition on issuance.--No credit card may 
                be issued to, or open end credit plan established on 
                behalf of, a consumer who has not attained the age of 
                18, unless the consumer has submitted a written 
                application to the card issuer that meets the 
                requirements of subparagraph (B).
                    ``(B) Application requirements.--An application to 
                open a credit card account by an individual who has not 
                attained the age of 18 as of the date of submission of 
                the application shall require--
                            ``(i) the signature of the parent, legal 
                        guardian, or spouse of the consumer, or any 
                        other individual having a means to repay debts 
                        incurred by the consumer in connection with the 
                        account, indicating joint liability for debts 
                        incurred by the consumer in connection with the 
                        account before the consumer has attained the 
                        age of 18;
                            ``(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; or
                            ``(iii) proof by the consumer that the 
                        consumer has completed a credit counseling 
                        course of instruction by a nonprofit budget and 
                        credit counseling agency approved by the Board 
                        for such purpose.
                    ``(C) Minimum requirements for counseling 
                agencies.--To be approved by the Board under 
                subparagraph (B)(iii), a credit counseling agency 
                shall, at a minimum--
                            ``(i) be a nonprofit budget and credit 
                        counseling agency, the majority of the board of 
                        directors of which--
                                    ``(I) is not employed by the 
                                agency; and
                                    ``(II) will not directly or 
                                indirectly benefit financially from the 
                                outcome of a credit counseling session;
                            ``(ii) if a fee is charged for counseling 
                        services, charge a reasonable fee, and provide 
                        services without regard to ability to pay the 
                        fee; and
                            ``(iii) provide trained counselors who 
                        receive no commissions or bonuses based on 
                        referrals, and demonstrate adequate experience 
                        and background in providing credit 
                        counseling.''.

SEC. 302. ENHANCED PENALTIES.

    Section 130(a)(2)(A) of the Truth in Lending Act (15 U.S.C. 1640 
(a)(2)(A)(iii)) is amended--
            (1) by striking ``or (iii) in the'' and inserting the 
        following:
            ``(iii) in the case of an individual action relating to an 
        open end credit plan that is not secured by real property or a 
        dwelling, twice the amount of any finance charge in connection 
        with the transaction, with a minimum of $500 and a maximum of 
        $5,000 or such higher amount as may be appropriate in the case 
        of an established pattern or practice of such failures; or
            ``(iv) in the''; and
            (2) in clause (ii), by striking ``this subparagraph'' and 
        inserting ``this clause''.

SEC. 303. RESTRICTIONS ON CERTAIN AFFINITY CARDS.

    Section 127 of the Truth in Lending Act (15 U.S.C. 1637) is amended 
by inserting after subsection (m) (as added by section 202 of this Act) 
the following new subsection:
    ``(n) Restrictions on Issuance of Affinity Cards to Students.--No 
credit card account under an open end credit plan may be established by 
an individual who has not attained the age of 18 as of the date of 
submission of the application pursuant to any agreement relating to 
affinity cards, as defined by the Board, between the creditor and an 
institution of higher education (as defined in section 101(a) of the 
Higher Education Act of 1965), unless the requirements of section 
127(c)(8) are met with respect to the obligor.''.
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