[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5280 Introduced in House (IH)]







110th CONGRESS
  2d Session
                                H. R. 5280

  To prevent unfair practices in credit card accounts, and for other 
                               purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            February 7, 2008

Mr. Lincoln Davis of Tennessee introduced the following bill; which was 
            referred to the Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
  To prevent unfair practices in credit card accounts, 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 ``Stop Unfair Practices in Credit 
Cards Act of 2007''.

SEC. 2. STOP UNFAIR INTEREST RATES AND FEES.

    Section 163 of the Truth in Lending Act (15 U.S.C. 1666b) is 
amended--
            (1) by striking the section title and all that follows 
        through ``If an open'' and inserting the following:
``Sec. 163. Billing period and finance charges
    ``(a) Billing Period.--
            ``(1) Fourteen-day minimum.--If an open'';
            (2) by striking ``(b) Subsection (a)'' and inserting the 
        following:
            ``(2) Excusable cause.--Subsection (a)''; and
            (3) by adding at the end the following:
    ``(b) No Interest Charge on Debt That Is Paid on Time.--If an open 
end consumer credit plan provides a time period within which an obligor 
may repay any portion of the credit extended without incurring an 
interest charge, and the obligor repays all or a portion of such credit 
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 the specified time period.
    ``(c) No Interest on Debt That Is Paid on Time and in Full.--In an 
open end consumer credit plan, if a billing statement requests an 
obligor to repay within a specified time period all of the credit 
extended under the plan and related finance charges, and the obligor 
pays all of the specified amount within the specified time period, the 
creditor may not impose or collect an additional interest charge on the 
amount that was paid in full and within the specified time period.
    ``(d) Limits on Interest Rate Increases.--
            ``(1) In general.--With respect to a credit card account 
        under an open end consumer credit plan, the creditor shall not 
        increase the periodic rate of interest applicable to extensions 
        of credit while such account remains open, unless--
                    ``(A) such increase is pursuant to the expiration 
                of an introductory rate which was disclosed under 
                section 127(c)(6);
                    ``(B) such increase is pursuant to the application 
                of a variable rate which was disclosed under section 
                127(c)(1)(A)(i)(II);
                    ``(C) such increase is pursuant to the application 
                of a penalty rate which was disclosed under subsections 
                (a)(4) and (c)(1)(A)(i) of section 127; or
                    ``(D) the obligor has provided specific written 
                consent to such increase at the time such increase was 
                proposed.
            ``(2) Limit on penalty interest rate.--If an obligor fails 
        to repay an extension of credit in accordance with the terms of 
        a credit card account under an open end consumer credit plan, 
        and the creditor determines to apply a penalty rate, as 
        described in paragraph (1)(C), notwithstanding paragraph 
        (1)(D), such penalty rate may not, while such account is open, 
        exceed 7 percentage points above the interest rate that was in 
        effect with respect to such account on the date immediately 
        preceding the first such penalty increase for such account.
    ``(e) Interest Rate Increases Limited to Future Credit 
Extensions.--With respect to a credit card account under an open end 
consumer credit plan, if the creditor increases the periodic interest 
rate applicable to an extension of credit under the account, such 
increased rate shall apply only to extensions of credit made on and 
after the date of such increase under the account, and any extension of 
credit under such account made before the date of such increase shall 
continue to incur interest at the rate that was in effect on the date 
prior to the date of the increase.
    ``(f) No Interest Charges on Fees.--With respect to a credit card 
account under an open end consumer credit plan, if the creditor imposes 
a transaction fee on the obligor, including a cash advance fee, late 
fee, over-the-limit fee, or balance transfer fee, the creditor may not 
impose or collect interest with respect to such fee amount.
    ``(g) Fixed Credit Limit.--With respect to each credit card account 
under an open end consumer credit plan, the creditor shall offer to the 
obligor the option of obtaining a fixed credit limit that cannot be 
exceeded, and with respect to which any request for credit in excess of 
such fixed limit must be refused, without exception and without 
imposing an over-the-limit fee or other penalty on such obligor.
    ``(h) Over-the-Limit Fee Restrictions.--With respect to a credit 
card account under an open end consumer credit plan, an over-the-limit 
fee, as described in section 127(c)(1)(B)(iii)--
            ``(1) may be imposed on the account only when an extension 
        of credit obtained by the obligor causes the credit limit on 
        such account to be exceeded, and may not be imposed when such 
        credit limit is exceeded due to a penalty fee, such as a late 
        fee or over-the-limit fee, that was added to the account 
        balance by the creditor; and
            ``(2) 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 no additional over-the-limit fee shall 
        be imposed in a subsequent billing cycle with respect to such 
        excess credit, unless the obligor has obtained an additional 
        extension of credit in excess of such credit limit during such 
        subsequent cycle.
    ``(i) Other Fees.--
            ``(1) No fee to pay a billing statement.--With respect to a 
        credit card account under an open end consumer credit plan, the 
        creditor may not impose a separate fee to allow the obligor to 
        repay an extension of credit or finance charge, whether such 
        repayment is made by mail, electronic transfer, telephone 
        authorization, or other means.
            ``(2) Reasonable currency exchange fee.--With respect to a 
        credit card account under an open end consumer credit plan, the 
        creditor may impose a fee for exchanging United States currency 
        with foreign currency in an account transaction, only if--
                    ``(A) such fee reasonably reflects the actual costs 
                incurred by the creditor to perform such currency 
                exchange;
                    ``(B) the creditor discloses publicly its method 
                for calculating such fee; and
                    ``(C) the primary Federal regulator of such 
                creditor determines that the method for calculating 
                such fee complies with this paragraph.
    ``(j) Annual Audit.--The primary Federal regulator of a card issuer 
shall audit, on at least an annual basis, the credit card operations 
and procedures used by such issuer to ensure compliance with this 
section and section 164, including by reviewing a sample of billing 
statements to determine when they were mailed and received, and by 
reviewing a sample of credit card accounts to determine when and how 
payments and finance charges were applied. Such regulator shall 
promptly require the card issuer to take any corrective action needed 
to comply with this section.''.

SEC. 3. STOP UNFAIR APPLICATION OF CARD PAYMENTS.

    Section 164 of the Truth in Lending Act (15 U.S.C. 1666c) is 
amended--
            (1) by striking the section heading and all that follows 
        through ``Payments'' and inserting the following:
``Sec. 164. Prompt and fair crediting of payments
    ``(a) In General.--Payments''; and
            (2) by adding at the end the following:
    ``(b) Application of Payment.--Upon receipt of a payment from a 
cardholder, the card issuer shall--
            ``(1) apply the payment first to the card balance bearing 
        the highest rate of interest, and then to each successive 
        balance bearing the next highest rate of interest, until the 
        payment is exhausted; and
            ``(2) after complying with paragraph (1), apply the payment 
        in the most effective way to minimize the imposition of any 
        finance charge to the account.
    ``(c) Changes by Card Issuer.--If a card issuer makes a material 
change in the mailing address, office, or procedures for handling 
cardholder payments, and such change causes a material delay in the 
crediting of a cardholder payment made during the 60-day period 
following the date on which such change took effect, the card issuer 
may not impose any late fee or finance charge for a late payment on the 
credit card account to which such payment was credited.''.

SEC. 4. STOP DECEPTIVE DISCLOSURE.

    Section 127(e) of the Truth in Lending Act (15 U.S.C. 1637(e)) is 
amended by adding at the end the following:
            ``(3) Interest rate linked to prime rate.--If a credit card 
        solicitation, application, agreement, or plan specifies use of 
        a variable interest rate established by reference to a `prime 
        rate', `prime interest rate', or similar rate or index, the 
        referenced rate shall be disclosed and defined as the bank 
        prime loan rate posted by a majority of the top 25 (by assets 
        in domestic offices) United States chartered commercial banks, 
        as published by the Board of Governors of the Federal Reserve 
        System. To avoid an unfair or deceptive act or practice, a card 
        issuer may not use the term `prime rate' to refer to any other 
        type of interest rate.''.

SEC. 5. DEFINITIONS.

    Section 103 of the Truth in Lending Act (15 U.S.C. 1602) is amended 
by adding at the end the following:
    ``(cc) Primary Federal Regulator.--
            ``(1) In general.--The term `primary Federal regulator', 
        when used with respect to a card issuer that is a depository 
        institution, has the same meaning as the term `appropriate 
        Federal banking agency', under section 3 of the Federal Deposit 
        Insurance Act.
            ``(2) Areas of responsibility.--For each card issuer within 
        its regulatory jurisdiction, the primary Federal regulator 
        shall be responsible for overseeing the credit card operations 
        of the card issuer, ensuring compliance with the requirements 
        of this title, and enforcing the prohibition against unfair or 
        deceptive acts or practices.''.

SEC. 6. 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 ``The Board shall'' and inserting 
                the following:
                    ``(A) In general.--The Board shall''; and
                    (B) by adding at the end the following:
                    ``(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:
            ``(5) Report to the congress.--The Board shall, on an 
        annual basis, transmit to the Congress and make public a report 
        containing an assessment by the Board of the profitability of 
        credit card operations of depository institutions. Such report 
        shall include estimates by the Board of the approximate, 
        relative percentage of income derived by such operations 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. 7. CONFORMING AMENDMENT.

    Section 8 of the Fair Credit and Charge Card Disclosure Act of 1988 
(15 U.S.C. 1637 note) is repealed.

SEC. 8. EFFECTIVE DATE.

    This Act and the amendments made by this Act shall take effect 180 
days after the date of the enactment of this Act.
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