[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5244 Introduced in House (IH)]







110th CONGRESS
  2d Session
                                H. R. 5244

  To amend the Truth in Lending Act to establish fair and transparent 
    practices relating to the extension of credit under an open end 
             consumer credit plan, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            February 7, 2008

Mrs. Maloney of New York (for herself, Mr. Frank of Massachusetts, Ms. 
 Waters, Mr. Gutierrez, Mr. Lynch, Mr. Ellison, Mr. Cohen, Mr. Fattah, 
Mr. Hinchey, Mr. Langevin, Mr. Nadler, Ms. Shea-Porter, Ms. Solis, Mr. 
Welch of Vermont, Mr. Wynn, Mr. Gonzalez, Mr. DeFazio, Mr. Taylor, Mr. 
  Obey, Ms. Hirono, Mrs. Boyda of Kansas, Ms. Wasserman Schultz, Mr. 
   Udall of Colorado, Mr. Dingell, Ms. Corrine Brown of Florida, Mr. 
   Thompson of Mississippi, Mr. Hastings of Florida, Ms. Clarke, Mr. 
Jackson of Illinois, Mr. Davis of Illinois, Mrs. Gillibrand, Ms. Eddie 
   Bernice Johnson of Texas, Ms. Watson, Mr. Arcuri, Mr. Engel, Mr. 
Tierney, Mr. Van Hollen, Mr. George Miller of California, Mr. Moran of 
 Virginia, Mr. Weiner, Mr. Abercrombie, Ms. Schakowsky, Mr. Shays, Mr. 
 Serrano, Mr. Doggett, and Mr. Lincoln Davis of Tennessee) introduced 
 the following bill; which was referred to the Committee on Financial 
                                Services

_______________________________________________________________________

                                 A BILL


 
  To amend the Truth in Lending Act to establish fair and transparent 
    practices relating to the extension of credit under an open end 
             consumer credit plan, 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 Cardholders' Bill of Rights 
Act of 2008''.

SEC. 2. CREDIT CARDS ON TERMS CONSUMERS CAN REPAY.

    (a) Universal Default Eliminated.--Chapter 2 of the Truth in 
Lending Act (15 U.S.C. 1631 et seq.) is amended by inserting after 
section 127A the following new section:
``Sec. 127B. Additional requirements for credit card accounts under an 
              open end consumer credit plan
    ``(a) Universal Default Eliminated for Credit Already 
Outstanding.--No creditor may use any adverse information concerning 
any consumer, including any information in any consumer report (as 
defined in section 603) or any change in the credit score of the 
consumer, as the basis for increasing any annual percentage rate of 
interest applicable to the outstanding balance on a credit card account 
of the consumer under an open end consumer credit plan at the time of 
any such increase, other than actions or omissions of the consumer that 
are directly related to such account.''.
    (b) Any-Time Any-Reason Changes in Terms Eliminated.--Section 127B 
of the Truth in Lending Act is amended by inserting after subsection 
(a) (as added by subsection (a)) the following new subsection:
    ``(b) Any-Time Any-Reason Changes in Terms Eliminated.--
            ``(1) In general.--No creditor may change any term of the 
        contract or agreement applicable with respect to any credit 
        card account of the consumer under an open end consumer credit 
        plan until renewal of the contract or agreement except for the 
        specific material reasons, and subject to specific limitations, 
        that are contained in the contract or agreement with respect to 
        such term at the time the account is opened.
            ``(2) Exception for increases in credit limit.--Paragraph 
        (1) shall not apply with respect to any increase in the amount 
        of credit authorized to be extended under an account described 
        in such paragraph.''.
    (c) Advance Notice of Credit Card Account Rate Increases and Right 
to Cancel Account.--Section 127B of the Truth in Lending Act is amended 
by inserting after subsection (b) (as added by subsection (b)) the 
following new subsection:
    ``(c) Advance Notice of Credit Card Account Rate Increases and 
Right To Cancel Account.--
            ``(1) Advance notice of credit card account rate increases 
        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, for any reason 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, may take effect before the end of the 45-
        day period beginning on the date notice of such increase is 
        sent to the cardholder.
            ``(2) Right to cancel without increase in apr on 
        outstanding balance.--Any consumer who receives a notice from a 
        creditor pursuant to paragraph (1) with respect to a credit 
        card account under an open end consumer credit plan shall have 
        the right--
                    ``(A) to cancel the credit card, by mail, 
                telephone, or electronic communication and without 
                penalty or the imposition of any fee with respect to 
                such cancellation, at any time during the period 
                beginning on the date the consumer receives the notice 
                pursuant to paragraph (1) and ending on the date the 
                consumer receives the third periodic statement with 
                respect to such account after the effective date of the 
                increase; and
                    ``(B) to pay any outstanding balance on the credit 
                card account that accrued before the effective date of 
                the increase at the annual percentage rate and 
                repayment period in effect before the notice was 
                received.
            ``(3) Notice requirements.--
                    ``(A) Initial notice requirement.--The notice 
                required under paragraph (1) with respect to an 
                increase in any annual percentage rate of interest 
                shall--
                            ``(i) be made in a clear and conspicuous 
                        manner; and
                            ``(ii) contain a brief statement of the 
                        right of the consumer to cancel the account and 
                        pay the balance at the annual percentage rate 
                        in effect before the increase in accordance 
                        with paragraph (2) and the mailing address, 
                        telephone number, and Internet address and 
                        Worldwide Web site at which the consumer may 
                        make any such cancellation.
                    ``(B) Subsequent notices required in periodic 
                statements.--Each periodic statement provided to the 
                consumer with respect to the credit card account after 
                a notice is provided under paragraph (1) until the 
                third periodic statement with respect to such account 
                after the effective date of the increase shall also 
                contain the information required in such notice.
                    ``(C) Pro forma notices do not meet notice 
                requirement.--A notice that terms may change, or will 
                change, for any or no reason does not constitute a 
                notice for purposes of this subsection.
            ``(4) Payment of post-increase extensions of credit.--If 
        any consumer obtains an extension of credit on a credit card 
        account on or after the effective date of the increase in the 
        annual percentage rate for which a notice was provided in 
        accordance with paragraph (1) and subsequently cancels the 
        account under paragraph (2), the outstanding balance of such 
        credit that was extended on or after the effective date of the 
        increase shall be subject to repayment at the increased rate in 
        effect at the time of the extension of credit.''.
    (d) Clerical Amendment.--The table of sections for chapter 2 of the 
Truth in Lending Act (15 U.S.C. 1631 et seq.) is amended by inserting 
after the item relating to section 127A the following new item:

``127B. Additional requirements for credit card accounts under an open 
                            end consumer credit plan.''.

SEC. 3. CLEAR EXPLANATION OF ACCOUNT FEATURES, TERMS, AND PRICING 
              REQUIRED AT RELEVANT TIMES.

    (a) Double Cycle Billing Prohibited.--Section 127B of the Truth in 
Lending Act is amended by inserting after subsection (c) (as added by 
section 2(c)) the following new subsection:
    ``(d) Double Cycle Billing Prohibited.--If an open end consumer 
credit plan provides a time period within which a consumer may repay 
the credit extended without incurring an interest charge, and the 
consumer repays all or a portion of such credit that is subject to such 
time period within the specified time period, the creditor may not 
impose or collect an interest charge on the portion of the credit that 
was repaid within such specified time period.''.
    (b) Limitations Relating to Account Balances Attributable Only to 
Accrued Interest.--Section 127B is amended by inserting after 
subsection (d) (as added by subsection (a)) the following new 
subsection:
    ``(e) Limitations Relating to Account Balances Attributable Only to 
Accrued Interest.--
            ``(1) In general.--If the outstanding balance on a credit 
        card account under an open end consumer credit plan represents 
        an amount attributable only to accrued interest on previously 
        repaid credit extended under the plan--
                    ``(A) no fee may be imposed or collected in 
                connection with such balance; and
                    ``(B) any failure to make timely repayments of such 
                balance shall not constitute a default on the account.
            ``(2) Rule of construction.--Paragraph (1) shall not be 
        construed as affecting--
                    ``(A) the consumer's obligation to pay any accrued 
                interest on a credit card account under an open end 
                consumer credit plan; or
                    ``(B) the accrual of interest on the outstanding 
                balance on any such account in accordance with the 
                terms of the account and this title.''.
    (c) Payoff Balance Required on Each Periodic Statement of 
Account.--Section 127B of the Truth in Lending Act is amended by 
inserting after subsection (e) (as added by subsection (b)) the 
following new subsection:
    ``(f) Each Periodic Statement of Account Required To Provide Notice 
for Obtaining Payoff Balance.--Each periodic statement provided by a 
creditor to a consumer with respect to a credit card account under an 
open end consumer credit plan shall contain the telephone number, 
Internet address, and Worldwide Web site at which the consumer may 
request the payoff balance on the account.''.
    (d) Consumer Right To Reject Card Before Notice Is Provided of Open 
Account.--Section 127B of the Truth in Lending Act is amended by 
inserting after subsection (g) (as added by subsection (c)) the 
following new subsection:
    ``(g) Consumer Right to Reject Card Before Notice of New Account Is 
Provided To Consumer Reporting Agency.--A creditor may not furnish any 
information to a consumer reporting agency (as defined in section 603) 
concerning a newly opened credit card account under an open end 
consumer credit plan until the credit card has been used or activated 
by the consumer.''.
    (e) Use of Terms Clarified.--Section 127B of the Truth in Lending 
Act is amended by inserting after subsection (g) (as added by 
subsection (d)) the following new subsection:
    ``(h) Use of Terms.--The following requirements shall apply with 
respect to the terms of any credit card account under any open end 
consumer credit plan:
            ``(1) `Fixed' rate.--The term `fixed', when appearing in 
        conjunction with a reference to the annual percentage rate or 
        interest rate applicable with respect to such account, may only 
        be used to refer to an annual percentage rate or interest rate 
        that will not change or vary for any reason over the period 
        clearly and conspicuously specified in the terms of the 
        account.
            ``(2) Prime rate.--The term `prime rate', when appearing in 
        any agreement or contract for any such account, may only be 
        used to refer to the bank prime rate published in the Federal 
        Reserve Statistical Release on selected interest rates (daily 
        or weekly), and commonly referred to as the H.15 release (or 
        any successor publication).
            ``(3) Due date.--
                    ``(A) In general.--Each periodic statement for any 
                such account shall contain a date by which the next 
                periodic payment on the account must be made to avoid a 
                late fee or be considered a late payment, and any 
                payment received by 5 P.M., Eastern Standard Time, on 
                such date shall be treated as a timely payment for all 
                purposes.
                    ``(B) Certain electronic fund transfers.--Any 
                payment with respect to any such account made by a 
                consumer on-line to the Web site of the credit card 
                issuer or by telephone directly to the credit card 
                issuer before 5 P.M., Eastern Standard Time, on any 
                business day shall be credited to the consumer's 
                account that business day.
                    ``(C) Presumption of timely payment.--Any evidence 
                provided by a consumer in the form of a receipt from 
                the United States Postal Service or other common 
                carrier indicating that a payment on a credit card 
                account was sent to the issuer not less than 7 days 
                before the due date contained in the periodic statement 
                under subparagraph (A) for such payment shall create a 
                presumption that such payment was made by the due date, 
                which may be rebutted by the creditor for fraud or 
                dishonesty on the part of the consumer with respect to 
                the mailing date.''.
    (f) Pro Rata Payment Allocations.--Section 127B of the Truth in 
Lending Act is amended by inserting after subsection (h) (as added by 
subsection (e)) the following new subsection:
    ``(i) Pro Rata Payment Allocations.--
            ``(1) In general.--Except as permitted under paragraph (2), 
        if the outstanding balance on a credit card account under an 
        open end consumer credit plan accrues interest at 2 or more 
        different annual percentage rates, the total amount of each 
        periodic payment made on such account shall be allocated by the 
        creditor between or among the outstanding balances at each such 
        annual percentage rate in the same proportion as each such 
        balance bears to the total outstanding balance on the account.
            ``(2) Allocation to higher rate.--Notwithstanding paragraph 
        (1), a creditor may elect, in any case described in such 
        paragraph, to allocate more than a pro rata share of any 
        payment to a portion of the outstanding balance that bears a 
        higher annual percentage rate than another portion of such 
        outstanding balance.''.
    (g) Timely Provision of Periodic Statements.--Section 127B of the 
Truth in Lending Act is amended by inserting after subsection (i) (as 
added by subsection (f)) the following new subsection:
    ``(j) Timely Provision of Periodic Statements.--Each periodic 
statement with respect to a credit card account under an open end 
consumer credit plan shall be sent by the creditor to the consumer not 
less than 25 calendar days before the due date identified in such 
statement for the next payment on the outstanding balance on such 
account.''.

SEC. 4. CONSUMER CHOICE WITH RESPECT TO OVER-THE-LIMIT TRANSACTIONS.

    Section 127B of the Truth in Lending Act is amended by inserting 
after subsection (j) (as added by section 3(g)) the following new 
subsections:
    ``(k) Opt-Out of Creditor Authorization of Over-the-Limit 
Transactions if Fees Are Imposed.--
            ``(1) In general.--In the case of any credit card account 
        under an open end consumer credit plan under which an over-the-
        limit-fee may be imposed by the creditor for any extension of 
        credit in excess of the amount of credit authorized to be 
        extended under such account, the consumer may elect to prohibit 
        the creditor, with respect to such account, from completing any 
        transaction involving the extension of credit, with respect to 
        such account, in excess of the amount of credit authorized by 
        notifying the creditor of such election in accordance with 
        paragraph (2).
            ``(2) Notification by consumer.--A consumer shall notify a 
        creditor under paragraph (1)--
                    ``(A) through the notification system maintained by 
                the creditor under paragraph (4); or
                    ``(B) by submitting to the creditor a signed notice 
                of election, by mail or electronic communication, on a 
                form issued by the creditor for purposes of this 
                subparagraph.
            ``(3) Effectiveness of election.--An election by a consumer 
        under paragraph (1) shall be effective beginning 3 business 
        days after the consumer notifies the creditor in accordance 
        with paragraph (2) and shall remain effective until the 
        consumer revokes the election.
            ``(4) Notification system.--Each creditor that maintains 
        credit card accounts under an open end consumer credit plan 
        shall establish and maintain a notification system, including a 
        toll-free telephone number, Internet address, and Worldwide Web 
        site, which permits any consumer whose credit card account is 
        maintained by the creditor to notify the creditor of an 
        election under this subsection in accordance with paragraph 
        (2).
            ``(5) Annual notice to consumers of availability of 
        election.--In the case of any credit card account under an open 
        end consumer credit plan, the creditor shall include a notice, 
        in clear and conspicuous language, of the availability of an 
        election by the consumer under this paragraph as a means of 
        avoiding over-the limit fees and a higher amount of 
        indebtedness, and the method for providing such notice--
                    ``(A) in the periodic statement required under 
                subsection (b) with respect to such account at least 
                once each calendar year; and
                    ``(B) in any such periodic statement which includes 
                a notice of the imposition of an over-the-limit fee 
                during the period covered by the statement.
            ``(6) No fees if consumer has made an election.--If a 
        consumer has made an election under paragraph (1), no over-the-
        limit fee may be imposed on the account for any reason that has 
        caused the outstanding balance in the account to exceed the 
        credit limit.
            ``(7) Regulations.--
                    ``(A) In general.--The Board shall issue 
                regulations allowing for the completion of over-the-
                limit transactions that for operational reasons exceed 
                the credit limit by a de minimis amount, even where the 
                cardholder has made an election under paragraph (1).
                    ``(B) Subject to no fee limitation.--The 
                regulations prescribed under subparagraph (A) shall not 
                allow for the imposition of any fee or any rate 
                increase based on the permitted over-the-limit 
                transactions.
    ``(l) Over-the-Limit Fee Restrictions.--With respect to a credit 
card account under an open end consumer credit plan, an over-the-limit 
fee may be imposed only once during a billing cycle if, on the last day 
of such billing cycle, the credit limit on the account is exceeded, and 
an over-the-limit fee, with respect to such excess credit, may be 
imposed only once in each of the 2 subsequent billing cycles, unless 
the consumer has obtained an additional extension of credit in excess 
of such credit limit during any such subsequent cycle or the consumer 
reduces the outstanding balance below the credit limit as of the end of 
such billing cycle.''.

SEC. 5. STRENGTHEN CREDIT CARD INFORMATION COLLECTION.

    Section 136(b) of the Truth in Lending Act (15 U.S.C. 1646(b)) is 
amended--
            (1) in paragraph (1)--
                    (A) by striking ``Collection required.--The Board 
                shall'' and inserting ``Collection required.--
                    ``(A) In general.--The Board shall''.
                    (B) by adding at the end the following new 
                subparagraph:
                    ``(B) Information to be included.--The information 
                under subparagraph (A) shall include, as of a date 
                designated by the Board--
                            ``(i) a list of each type of transaction or 
                        event for which one or more of the card issuers 
                        has imposed a separate interest rate upon a 
                        cardholder, including purchases, cash advances, 
                        and balance transfers;
                            ``(ii) for each type of transaction or 
                        event identified under clause (i)--
                                    ``(I) each distinct interest rate 
                                charged by the card issuer to a 
                                cardholder, as of the designated date; 
                                and
                                    ``(II) the number of cardholders to 
                                whom each such interest rate was 
                                applied during the calendar month 
                                immediately preceding the designated 
                                date, and the total amount of interest 
                                charged to such cardholders at each 
                                such rate during such month;
                            ``(iii) a list of each type of fee that one 
                        or more of the card issuers has imposed upon a 
                        cardholder as of the designated date, including 
                        any fee imposed for obtaining a cash advance, 
                        making a late payment, exceeding the credit 
                        limit on an account, making a balance transfer, 
                        or exchanging United States dollars for foreign 
                        currency;
                            ``(iv) for each type of fee identified 
                        under clause (iii), the number of cardholders 
                        upon whom the fee was imposed during the 
                        calendar month immediately preceding the 
                        designated date, and the total amount of fees 
                        imposed upon cardholders during such month;
                            ``(v) the total number of cardholders that 
                        incurred any interest charge or any fee during 
                        the calendar month immediately preceding the 
                        designated date; and
                            ``(vi) any other information related to 
                        interest rates, fees, or other charges that the 
                        Board deems of interest.''; and
            (2) by adding at the end the following new paragraph:
            ``(5) Report to congress.--The Board shall, on an annual 
        basis, transmit to Congress and make public a report containing 
        estimates by the Board of the approximate, relative percentage 
        of income derived by the credit card operations of depository 
        institutions from--
                    ``(A) the imposition of interest rates on 
                cardholders, including separate estimates for--
                            ``(i) interest with an annual percentage 
                        rate of less than 25 percent; and
                            ``(ii) interest with an annual percentage 
                        rate equal to or greater than 25 percent;
                    ``(B) the imposition of fees on cardholders;
                    ``(C) the imposition of fees on merchants; and
                    ``(D) any other material source of income, while 
                specifying the nature of that income.''.

SEC. 6. STANDARDS APPLICABLE TO INITIAL ISSUANCE OF SUBPRIME OR ``FEE 
              HARVESTER'' CARDS.

    Section 127B of the Truth in Lending Act is amended by inserting 
after subsection (l) (as added by section 4) the following new 
subsection:
    ``(m) Standards Applicable to Initial Issuance of Subprime or `Fee 
Harvester' Cards.--In the case of any credit card account under an open 
end consumer credit plan the terms of which require the payment of fees 
(other than late fees or over-the-limit fees) by the consumer in the 
first year the account is opened in an amount in excess of 25 percent 
of the total amount of credit authorized under the account, the credit 
card may not be issued to the consumer and the opening of the account 
may not be reported to any consumer reporting agency (as defined in 
section 603) until the creditor receives payment in full of all such 
fees, and such payment may not be made from the credit made available 
by the card.''.

SEC. 7. EFFECTIVE DATE.

    (a) In General.--The amendments made by this Act shall apply to all 
credit card accounts under open end consumer credit plans as of the end 
of the 1-year period beginning on the date of the enactment of this 
Act.
    (b) Regulations.--The Board of Governors of the Federal Reserve 
System, in consultation with all Federal agencies referred to in any 
provision of section 108 of the Truth in Lending Act, shall prescribe 
regulations, in final form, implementing the amendments made by this 
Act before the end of the 6-month period beginning on the date of the 
enactment of this Act.
                                 <all>