I 111th CONGRESS 1st Session H. R. 2309 IN THE HOUSE OF REPRESENTATIVES May 7, 2009 Mr. Rush (for himself, Ms. Schakowsky, and Ms. Matsui) introduced the following bill; which was referred to the Committee on Energy and Commerce A BILL To provide authority to the Federal Trade Commission to expedite rulemakings concerning consumer credit or debt and to direct the Commission to examine and promulgate rules with regard to debt settlement and automobile sales, and for other purposes.

1.

Short title

This Act may be cited as the Consumer Credit and Debt Protection Act.

2.

FTC Rulemaking relating to credit or debt

(a)

Expedited rulemaking

Section 18 of the Federal Trade Commission Act (15 U.S.C. 57a) is amended by adding at the end the following new subsection: (k)Notwithstanding any other procedures set forth in this section or section 22, for any rulemaking relating to consumer credit or debt, the Commission shall conduct such rulemaking in accordance with section 553 of title 5, United States Code, and the provisions for judicial review of rules promulgated in accordance such section shall apply to any rule promulgated in such a rulemaking. . (b)

Specific rulemakings

(1)

Debt settlement

(A)

In general

The Federal Trade Commission shall examine the practices of providers of debt settlement services and prescribe such rules as the Commission determines necessary (in accordance with section 553 of title 5, United States Code) in order to prevent unfair and deceptive acts or practices of providers of such services. The Commission shall consider adopting rules that— (i)prohibit the charging of fees to consumers prior to any debt settlement service being fully rendered and limiting fees that may be charged after a settlement with a creditor is reached; and (ii)require disclosures before a contract is signed regarding the fee structure, expected time frames for a successful settlement, success rate of debtors in settling their debts, information about creditor participation in settlement plans, and the potential impact on a consumer’s credit score. (B)

Definition

For purposes of subparagraph (A), the term debt settlement service means a commercial service provided to assist consumers in managing and repaying consumer debt, including the offering of advice or acting as an intermediary between a debtor and one or more of the debtor’s creditors, where the primary purpose of the advice or action is to obtain a settlement for less than the full amount of debt owed. (2)

Automobile sales

The Federal Trade Commission shall examine the practices of automobile dealers with respect to credit and lending and shall prescribe such rules as the Commission determines necessary (in accordance with section 553 of title 5, United States Code) in order to prevent unfair and deceptive acts or practices of such dealers. The Commission shall consider adopting rules that— (A)restrict post-sale changes in financing terms; (B)require that automobile purchase agreements or sales contracts entered into between a consumer and an automobile dealer include a provision which permits the consumer to cancel the transaction within a specified period following the sale or receipt of final information concerning the terms of the sale or financing; and (C)limit the ability of automobile dealers to accept or solicit compensation that is based on the interest rate, annual percentage rate, or the amount financed with respect to the sale of an automobile and that is either— (i)for the provision, procurement, or arrangement of financing; or (ii)for the sale, assignment, or transfer of the installment sale contract. (c)

Deadline for rulemakings

The Commission shall commence the rulemakings required under subsection (b) within 6 months after the date of enactment of this Act.

3.

Authority to obtain civil penalties in connection with unfair and deceptive acts or practices relating to consumer credit or debt

Section 5(m)(1) of the Federal Trade Commission Act (15 U.S.C. 45(m)(1)) is amended— (1)by redesignating subparagraph (C) as subparagraph (D), and in such subparagraph (as so redesignated), by striking subparagraphs (A) and (B) and inserting subparagraphs (A), (B), and (C); and (2)by inserting after subparagraph (B) the following new subparagraph: (C)The Commission may commence a civil action to recover a civil penalty in a district court of the United States against any person, partnership, or corporation which engages in any unfair or deceptive acts or practices in connection with consumer credit or debt with actual knowledge or knowledge fairly implied on the basis of objective circumstances that such an act is unfair or deceptive. In such action, such person, partnership, or corporation shall be liable for a civil penalty as provided in subparagraph (A). .

4.

Enforcement by State attorneys general

(a)

In general

Except as provided in subsection (f), a State, as parens patriae, may bring a civil action on behalf of its residents in an appropriate State or district court of the United States to enforce the provisions of the Federal Trade Commission Act or any other Act enforced by the Federal Trade Commission to obtain penalties and relief provided under such Acts whenever the attorney general of the State has reason to believe that the interests of the residents of the State have been or are being threatened or adversely affected by a violation of a rule prescribed under section 2(b) or any other rule relating to consumer credit or debt promulgated by the Federal Trade Commission. (b)

Notice

The State shall serve written notice to the Commission of any civil action under subsection (a) at least 60 days prior to initiating such civil action. The notice shall include a copy of the complaint to be filed to initiate such civil action, except that if it is not feasible for the State to provide such prior notice, the State shall provide notice immediately upon instituting such civil action. (c)

Intervention by FTC

Upon receiving the notice required by subsection (b), the Commission may intervene in such civil action and upon intervening— (1)be heard on all matters arising in such civil action; (2)remove the action to the appropriate United States district court; and (3)file petitions for appeal of a decision in such civil action. (d)

Savings clause

Nothing in this section shall prevent the attorney general of a State from exercising the powers conferred on the attorney general 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. Nothing in this section shall prohibit the attorney general of a State, or other authorized State officer, from proceeding in State or Federal court on the basis of an alleged violation of any civil or criminal statute of that State. (e)

Venue; service of process; joinder

In a civil action brought under subsection (a)— (1)the venue shall be a judicial district in which the lender or a related party operates or is authorized to do business; (2)process may be served without regard to the territorial limits of the district or of the State in which the civil action is instituted; and (3)a person who participated with a lender or related party to an alleged violation that is being litigated in the civil action may be joined in the civil action without regard to the residence of the person. (f)

Preemptive action by FTC

Whenever a civil action or an administrative action has been instituted by or on behalf of the Commission for violation of any rule described under subsection (a), no State may, during the pendency of such action instituted by or on behalf of the Commission, institute a civil action under subsection (a) against any defendant named in the complaint in such action for violation of any rule as alleged in such complaint. (g)

Award of costs and fees

If the attorney general of a State prevails in any civil action under subsection (a), the State can recover reasonable costs and attorney fees from the lender or related party.