[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 627 Engrossed in House (EH)]

111th CONGRESS
  1st Session
                                H. R. 627

_______________________________________________________________________

                                 AN ACT


 
  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 2009''.

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

    (a) Retroactive Rate Increases and Universal Default Limited.--
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) Retroactive Rate Increases and Universal Default Limited.--
            ``(1) In general.--Except as provided in subsection (b), no 
        creditor may increase any annual percentage rate of interest 
        applicable to the existing balance on a credit card account of 
        the consumer under an open end consumer credit plan.
            ``(2) Existing balance defined.--For purposes of this 
        subsection and subsections (b) and (c), the term `existing 
        balance' means the amount owed on a consumer credit card 
        account as of the end of the 7th day after the creditor 
        provides notice of an increase in the annual percentage rate in 
        accordance with subsection (c).
            ``(3) Treatment of existing balances following rate 
        increase.--If a creditor increases any annual percentage rate 
        of interest applicable to the credit card account of a consumer 
        under an open end consumer credit plan and there is an existing 
        balance in the account to which such increase may not apply, 
        the creditor shall allow the consumer to repay the existing 
        balance using a method provided by the creditor which is at 
        least as beneficial to the consumer as 1 of the following 
        methods:
                    ``(A) An amortization period for the existing 
                balance of at least 5 years starting from the date on 
                which the increased annual percentage rate went into 
                effect.
                    ``(B) The percentage of the existing balance that 
                was included in the required minimum periodic payment 
                before the rate increase cannot be more than doubled.
            ``(4) Limitation on certain fees.--If--
                    ``(A) a creditor increases any annual percentage 
                rate of interest applicable on a credit card account of 
                the consumer under an open end consumer credit plan; 
                and
                    ``(B) the creditor is prohibited by this section 
                from applying the increased rate to an existing 
                balance,
        the creditor may not assess any fee or charge based solely on 
        the existing balance.''.
    (b) Exceptions to the Amendment Made by Subsection (a).--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) Exceptions.--
            ``(1) In general.--A creditor may increase any annual 
        percentage rate of interest applicable to the existing balance 
        on a credit card account of the consumer under an open end 
        consumer credit plan only under the following circumstances:
                    ``(A) Change in index.--The increase is due solely 
                to the operation of an index that is not under the 
                creditor's control and is available to the general 
                public.
                    ``(B) Expiration of promotional rate.--The increase 
                is due solely to the expiration of a promotional rate.
                    ``(C) Failure to comply with workout plan.--The 
                increase is due solely to the fact the consumer failed 
                to comply with a negotiated workout plan with the 
                creditor.
                    ``(D) Payment not received during 30-day grace 
                period after due date.--The increase is due solely to 
                the fact that any consumer's minimum payment has not 
                been received within 30 days after the due date for 
                such minimum payment.
            ``(2) Limitation on increases due to failure to comply with 
        workout plan.--Notwithstanding paragraph (1)(C), the annual 
        percentage rate in effect with respect to each category of 
        transactions for a credit card account under an open end 
        consumer credit plan after the increase permitted under such 
        subsection due to the failure of a consumer to comply with a 
        workout plan may not exceed the annual percentage applicable to 
        such category of transactions on the day before the effective 
        date of the workout plan.
            ``(3) Standards required.--The Board shall prescribe, by 
        regulation, standards--
                    ``(A) for entering into any workout plan applicable 
                to any credit card account under an open end consumer 
                credit plan; and
                    ``(B) governing any such workout plan.''.
    (c) Advance Notice of Rate Increases and Significant Contract 
Changes.--Section 127B of the Truth in Lending Act is amended by 
inserting after subsection (b) (as added by subsection (b)) the 
following new subsections:
    ``(c) Advance Notice of Rate Increases.--
            ``(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 
        described in subsection (b)(1)(A)) may take effect unless the 
        creditor provides a written notice to the consumer at least 45 
        days before the increase takes effect which fully describes the 
        changes in the annual percentage rate, in a complete and 
        conspicuous manner, and the extent to which such increase would 
        apply to an existing balance.
            ``(2) Limitation on rate increase notices within first 
        year.--Except in the case of an increase described in 
        subparagraph (B), (C), or (D) of subsection (b)(1), no written 
        notice under paragraph (1) of an increase in any annual 
        percentage rate of interest on any credit card account under an 
        open end consumer credit plan (for which notice is required 
        under such paragraph) shall be effective before the end of the 
        1-year period beginning when the account is opened.
            ``(3) Minimum term for promotional rates.--In the case of a 
        promotional rate, no written notice under paragraph (1) of an 
        increase in any annual percentage rate of interest on any 
        credit card account under an open end consumer credit plan 
        shall be effective before the end of a 6-month period beginning 
        from the date the promotional rate takes effect.
    ``(d) Advance Notice of Account Closure.--
            ``(1) In general.--In the case of any credit card account 
        under an open end consumer credit plan, a creditor may not 
        close such account unless the creditor provides a written 
        notice to the consumer at least 30 days before the closure 
        takes place, and which notifies the consumer--
                    ``(A) of the reason the account is being closed;
                    ``(B) of any recourse that the consumer may take to 
                prevent the account from being closed;
                    ``(C) of any program under which the consumer may 
                repay the balance on the account over a period of time; 
                and
                    ``(D) that if the consumer's account is closed, it 
                may have an impact on the consumer's credit score.
            ``(2) Exception.--The requirements of paragraph (1) shall 
        not apply in the case of a consumer request that the creditor 
        close such account.
    ``(e) Advance Notice of Significant Contract Changes.--In the case 
of any credit card account under an open end consumer credit plan, no 
significant change to the contract (such as any fee) may take effect 
unless the creditor provides a written notice of at least 45 days 
before the change takes effect which fully describes the changes in the 
contract, in a complete and conspicuous manner.''.
    (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. ADDITIONAL PROVISIONS REGARDING ACCOUNT FEATURES, TERMS, AND 
              PRICING.

    (a) Double Cycle Billing Prohibited.--Section 127B of the Truth in 
Lending Act is amended by inserting after subsection (d) (as added by 
section 2(c)) the following new subsection:
    ``(e) Double Cycle Billing.--
            ``(1) In general.--No finance charge may be imposed by a 
        creditor with respect to any balance on a credit card account 
        under an open end consumer credit plan that is based on 
        balances for days in billing cycles preceding the most recent 
        billing cycle as a result of the loss of any grace period.
            ``(2) Exceptions.--Paragraph (1) shall not apply so as to 
        prohibit a creditor from--
                    ``(A) adjusting finance charges following the 
                return of a payment for insufficient funds; or
                    ``(B) adjusting finance charges following 
                resolution of a billing error dispute.
            ``(3) Grace period.--For purposes of this subsection, the 
        term `grace period' means, with respect to any credit card 
        account under an open end consumer credit plan, the time 
        period, if any, provided by the creditor within which any 
        credit extended under such credit plan for purchases of goods 
        or services may be repaid by the consumer without incurring a 
        finance charge.''.
    (b) Limitations Relating to Account Balances Attributable Only to 
Accrued Interest.--Section 127B is amended by inserting after 
subsection (e) (as added by subsection (a)) the following new 
subsection:
    ``(f) 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 at the end 
        of a billing period represents an amount attributable only to 
        interest accrued during the preceding billing period on an 
        outstanding balance that was fully repaid during the preceding 
        billing period--
                    ``(A) no fee may be imposed or collected in 
                connection with such balance attributable only to 
                interest before such end of the billing period; and
                    ``(B) any failure to make timely repayments of the 
                balance attributable only to interest before such end 
                of the billing period shall not constitute a default on 
                the account.
        Such balance remains a legally binding debt obligation.
            ``(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) Access to Payoff Balance Information.--Section 127B of the 
Truth in Lending Act is amended by inserting after subsection (f) (as 
added by subsection (b)) the following new subsection:
    ``(g) Payoff Balance Information.--
            ``(1) In general.--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 toll-
        free telephone number, Internet address, and website at which 
        the consumer may request the payoff balance on the account.
            ``(2) Small issuers.--Notwithstanding paragraph (1), in the 
        case of any credit card issuer which issues fewer than 50,000 
        credit cards in conjunction with credit card accounts under 
        open end consumer credit plans, each periodic statement 
        provided by such a creditor to a consumer with respect to any 
        such credit card account shall contain the toll-free telephone 
        number, Internet address, or website at which the consumer may 
        request the payoff balance on the account.''.
    (d) Consumer Right To Reject Card After 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:
    ``(h) Consumer Right To Reject Card After Notice of New Account Is 
Provided to Consumer Reporting Agency.--
            ``(1) In general.--A creditor shall remove any information 
        furnished to a consumer reporting agency (as defined in section 
        603) concerning the establishment of a newly opened credit card 
        account under an open end consumer credit plan if the consumer 
        has not used or activated the account and the consumer contacts 
        the creditor within 45 days of the establishment of the account 
        to close the account.
            ``(2) Rule of construction.--Paragraph (1) shall not be 
        construed as prohibiting a creditor from furnishing information 
        about any application for a credit card account under an open 
        end consumer credit plan or any inquiry about any such account 
        to a consumer reporting agency (as so defined).''.
    (e) Use of Terms Clarified.--Section 127B of the Truth in Lending 
Act is amended by inserting after subsection (h) (as added by 
subsection (d)) the following new subsection:
    ``(i) 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., local time at the location 
                specified by the creditor for the receipt of payment, 
                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 online to the website of the credit card 
                issuer or by telephone directly to the credit card 
                issuer before 5 p.m., local time at the location 
                specified by the creditor for the receipt of payment, 
                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) Payment Allocations.--Section 127B of the Truth in Lending Act 
is amended by inserting after subsection (i) (as added by subsection 
(e)) the following new subsection:
    ``(j) Payment Allocations.--
            ``(1) In general.--If 2 or more different annual percentage 
        rates apply to different portions of an outstanding balance on 
        a credit card account under an open end consumer credit plan, 
        the amount of any periodic payment in excess of the required 
        minimum payment shall be allocated first to the balance with 
        the highest annual percentage rate and any remaining portion is 
        allocated to any other balance in descending order, based on 
        the applicable annual percentage rate each portion of such 
        balance bears, from the highest such rate to the lowest.
            ``(2) Clarification relating to certain deferred interest 
        arrangements.--A creditor may allocate the entire amount paid 
        by the consumer in excess of the required minimum periodic 
        payment to a balance on which interest is deferred during the 2 
        billing cycles immediately preceding the expiration of the 
        period during which interest is deferred.
            ``(3) Prohibition on restricted grace periods under certain 
        circumstances.--If, with respect to any credit card account 
        under an open end consumer credit plan, a creditor offers a 
        time period in which to repay credit extended without incurring 
        finance charges to cardholders who pay the balance in full, the 
        creditor may not deny a consumer who takes advantage of a 
        promotional rate balance or deferred interest rate balance 
        offer with respect to such an account any such time period for 
        repaying credit without incurring finance charges.''.
    (g) Timely Provision of Periodic Statements.--Section 127B of the 
Truth in Lending Act is amended by inserting after subsection (j) (as 
added by subsection (f)) the following new subsection:
    ``(k) 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 21 calendar days before the due date identified in such 
statement for the next payment on the outstanding balance on such 
account, and section 163(a) shall be applied with respect to any such 
account by substituting `21' for `fourteen'.''.
    (h) Due Dates.--Section 127B of the Truth in Lending Act is amended 
by inserting after subsection (k) (as added by subsection (g)) the 
following new subsection:
    ``(l) Due Dates.--If the date established by a creditor as the date 
on which a periodic payment on a credit card account under an open end 
consumer credit plan is due is a day on which mail is either not 
delivered to such creditor or is not accepted by the creditor for 
processing on such day, the creditor may not treat the receipt by the 
creditor of any such periodic payment by mail as of the next business 
day of the creditor as late for any purpose.''.
    (i) Availability of Legitimate and Accredited Credit Counseling.--
The Board of Governors of the Federal Reserve System shall suggest 
appropriate guidelines for creditors to follow with respect to credit 
card accounts under open end consumer credit plans to supply consumer 
cardholders with information regarding the availability of legitimate 
and accredited credit counseling services.

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 (l) (as added by section 3(h)) the following new 
subsections:
    ``(m) Opt-in Required for 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, no such fee shall be charged 
        unless the consumer has elected to permit the creditor, with 
        respect to such account, to complete transactions involving the 
        extension of credit, with respect to such account, in excess of 
        the amount of credit authorized.
            ``(2) Disclosure by creditor.--No election by a consumer 
        under paragraph (1) shall take effect unless the consumer, 
        before making such election, received a notice from the 
        creditor of any over-the-limit fee in the form and manner, and 
        at the time, determined by the Board.
            ``(3) Form of election.--A consumer may make the election 
        referred to in paragraph (1) orally or in writing.
            ``(4) Time of election.--A consumer may make the election 
        referred to in paragraph (1) at any time and it shall be 
        effective until the election is revoked by the consumer orally 
        or in writing.
            ``(5) 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 not 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 with respect to the account of any 
                cardholder who has not made the election in paragraph 
                (1).
                    ``(C) Disclosures.--The Board shall prescribe 
                regulations governing any disclosure under this 
                subsection.
    ``(n) 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.
    ``(o) Over-the-Limit Fees Prohibited in Conjunction With Certain 
Credit Holds.--Notwithstanding subsection (n), an over-the-limit fee 
may not be imposed if the credit limit was exceeded due to a hold 
unless the actual amount of the transaction for which the hold was 
placed would have resulted in the consumer exceeding the credit 
limit.''.

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, for the relevant 
                semiannual period, the following information with 
                respect each creditor in connection with any consumer 
                credit card account:
                            ``(i) A list of each type of transaction or 
                        event during the semiannual period for which 1 
                        or more creditors has imposed a separate 
                        interest rate upon a consumer credit card 
                        accountholder, 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 
                                consumer credit card accountholder 
                                during the semiannual period; and
                                    ``(II) the number of cardholders to 
                                whom each such interest rate was 
                                applied during the last calendar month 
                                of the semiannual period, and the total 
                                amount of interest charged to such 
                                accountholders at each such rate during 
                                such month.
                            ``(iii) A list of each type of fee that 1 
                        or more of the creditors has imposed upon a 
                        consumer credit card accountholder during the 
                        semiannual period, 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 
                        accountholders upon whom the fee was imposed 
                        during each calendar month of the semiannual 
                        period, and the total amount of fees imposed 
                        upon cardholders during such month.
                            ``(v) The total number of consumer credit 
                        card accountholders that incurred any finance 
                        charge or any other fee during the semiannual 
                        period.
                            ``(vi) The total number of consumer credit 
                        card accounts maintained by each creditor as of 
                        the end of the semiannual period.
                            ``(vii) The total number and value of cash 
                        advances made during the semiannual period 
                        under a consumer credit card account.
                            ``(viii) The total number and value of 
                        purchases involving or constituting consumer 
                        credit card transactions during the semiannual 
                        period.
                            ``(ix) The total number and amount of 
                        repayments on outstanding balances on consumer 
                        credit card accounts in each month of the 
                        semiannual period.
                            ``(x) The percentage of all consumer credit 
                        card accountholders (with respect to any 
                        creditor) who--
                                    ``(I) incurred a finance charge in 
                                each month of the semiannual period on 
                                any portion of an outstanding balance 
                                on which a finance charge had not 
                                previously been incurred; and
                                    ``(II) incurred any such finance 
                                charge at any time during the 
                                semiannual period.
                            ``(xi) The total number and amount of 
                        balances accruing finance charges during the 
                        semiannual period.
                            ``(xii) The total number and amount of the 
                        outstanding balances on consumer credit card 
                        accounts as of the end of such semiannual 
                        period.
                            ``(xiii) Total credit limits in effect on 
                        consumer credit card accounts as of the end of 
                        such semiannual period and the amount by which 
                        such credit limits exceed the credit limits in 
                        effect as of the beginning of such period.
                            ``(xiv) 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 (o) (as added by section 4) the following new 
subsection:
    ``(p) Standards Applicable to Initial Issuance of Subprime or `Fee 
Harvester' Cards.--
            ``(1) In general.--In the case of any credit card account 
        under an open end consumer credit plan the terms of which 
        require the payment of any fee (other than any late fee, any 
        over-the-limit fee, or any fee for a payment returned for 
        insufficient funds) 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 when the 
        account is opened, no payment of any fee (other than any late 
        fee, any over-the-limit fee, or any fee for a payment returned 
        for insufficient funds) may be made from the credit made 
        available by the card.
            ``(2) Rule of construction.--No provision of this 
        subsection may be construed as authorizing any imposition or 
        payment of advance fees otherwise prohibited by any provision 
        of law.''.

SEC. 7. 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 paragraphs:
            ``(8) Extensions of credit to underage consumers.--
                    ``(A) In general.--No credit card may be knowingly 
                issued to, or open end credit plan established on 
                behalf of, a consumer who has not attained the age of 
                18, unless the consumer is emancipated under applicable 
                State law or the parent or legal guardian of such 
                consumer is designated as the primary account holder.
                    ``(B) Rule of construction.--For the purposes of 
                determining the age of an applicant, the submission of 
                a signed application by a consumer stating that the 
                consumer is over 18 shall be considered sufficient 
                proof of age.
            ``(9) Provisions applicable with regard to the issuance of 
        credit cards to full-time, traditional-aged college students.--
                    ``(A) Definitions.--For purposes of this paragraph, 
                the following definitions shall apply:
                            ``(i) College student credit card account 
                        defined.--The term `college student credit card 
                        account' means a credit card account under an 
                        open end consumer credit plan established or 
                        maintained for or on behalf of any college 
                        student.
                            ``(ii) College student.--The term `college 
                        student' means an individual--
                                    ``(I) who is a full-time student 
                                attending an institution of higher 
                                education; and
                                    ``(II) who has attained the age of 
                                18 and has not yet attained the age of 
                                21.
                            ``(iii) Institution of higher education.--
                        The term `institution of higher education' has 
                        the same meaning as in section 101(a) of the 
                        Higher Education Act of 1965 (20 U.S.C. 
                        1001(a)).
                    ``(B) Maximum amount limitation as a percentage of 
                gross income.--Unless a parent, legal guardian, or 
                spouse of a college student assumes joint liability for 
                debts incurred by the student in connection with a 
                college student credit card account--
                            ``(i) the amount of credit which may be 
                        extended by any one creditor to the full-time 
                        college student may not exceed, during any full 
                        calendar year, the greater of--
                                    ``(I) 20 percent of the annual 
                                gross income of the student; or
                                    ``(II) $500; and
                            ``(ii) no creditor shall grant a student a 
                        credit card account, if the credit limit for 
                        that credit card account, combined with the 
                        credit limits of any other credit card accounts 
                        held by the student, would exceed 30 percent of 
                        the annual gross income of the student in the 
                        most recently completed calendar year.
                    ``(C) Parental approval required to increase credit 
                lines for accounts for which parent is jointly 
                liable.--No increase may be made in the amount of 
                credit authorized to be extended under a college 
                student credit card account for which a parent, legal 
                guardian, or spouse of the consumer has assumed joint 
                liability for debts incurred by the consumer in 
                connection with the account, before the consumer 
                attains the age of 21, with respect to such consumer, 
                unless the parent, guardian, or spouse of the consumer, 
                as applicable, approves in writing, and assumes joint 
                liability for, such increase.
                    ``(D) Income verification.--For purposes of this 
                paragraph, a creditor shall require adequate proof of 
                income, income history, and credit history, subject to 
                the rules of the Board, before any college student 
                credit card account may be opened by or on behalf of a 
                student.
                    ``(E) Prohibition on more than 1 credit card 
                account for any college student.--No creditor may open 
                a credit card account for, or issue any credit card to, 
                any college student who--
                            ``(i) has no verifiable annual gross 
                        income; and
                            ``(ii) already maintains a credit card 
                        account under an open end consumer credit plan 
                        with that creditor, or any affiliate thereof.
                    ``(F) Exemption authority.--The Board may, by rule, 
                provide for exemptions to the provisions of this 
                paragraph, as deemed necessary or appropriate by the 
                Board, consistent with the purposes of this 
                paragraph.''.

SEC. 8. PROHIBIT FEES FOR PAYMENT ON CREDIT CARD ACCOUNTS BY TELEPHONE 
              OR ELECTRONIC FUND TRANSFERS.

    Section 164 of the Truth in Lending Act (15 U.S.C. 1666c) is 
amended--
            (1) by striking ``Payments received'' and inserting ``(a) 
        In General.--Payments received''; and
            (2) by adding at the end the following new subsection:
    ``(b) Payment Fees.--
            ``(1) Prohibition on fee based on mode of payment.--Except 
        as provided in paragraph (2), in the case of a credit card 
        account under an open end consumer credit plan, a creditor may 
        not impose a fee on the obligor based on the particular manner 
        in which the obligor makes a payment on such account.
            ``(2) Exception.--If the obligor requests to make an 
        expedited payment on a credit card account under an open end 
        consumer credit plan by telephone on the date that a payment is 
        due, or the day immediately preceding such date, the creditor 
        may assess a fee for crediting the payment to the obligor's 
        account on or by such date.''.

SEC. 9. REGULATIONS RELATING TO ACTIVE DUTY MILITARY CONSUMERS AND 
              RECENTLY DISABLED VETERANS.

    Section 127B of the Truth in Lending Act is amended by inserting 
after subsection (p) (as added by section 6) the following new 
subsection:
    ``(q) Regulations Relating to Active Duty Military Consumers and 
Recently Disabled Veterans.--In the case of any credit card account, 
under an open end consumer credit plan, held by any veteran receiving 
compensation for a service-connected disability (as such terms are 
defined in section 101 of title 38, United States Code) that occurred 
less than 2 years before or any active duty military consumer (as 
defined in section 603(q)(2) of this Act) , the Board shall prescribe 
regulations that prohibits the creditor with respect to such account 
from making adverse reports to any consumer reporting agency with 
respect while the consumer maintains status as such a veteran or as an 
active duty military consumer.''.

SEC. 10. POSTING INFORMATION ON THE INTERNET.

    Section 122 of the Truth in Lending Act ( U.S.C. 1632) is amended 
by adding at the end the following new subsection:
    ``(d) Internet Posting of Credit Card Agreements.--
            ``(1) Posting agreements.--.A creditor shall establish and 
        maintain an Internet site on which the creditor will post the 
        written agreement between the creditor and the consumer for 
        each open-end consumer credit plan not secured by a dwelling 
        that has a credit card feature.
            ``(2) Providing copy of contracts to the board.--A creditor 
        shall provide to the Board in electronic format, the consumer 
        credit card agreements that the creditor publishes on the 
        creditor's Internet site.
            ``(3) Record repository.--The Board shall establish and 
        maintain on its publically available Internet site a central 
        repository of the consumer credit card agreements received from 
        the creditors pursuant to this subsection and such agreements 
        shall be easily accessible and retrievable.
            ``(4) Exception.--Paragraphs (1) and (2) shall not apply to 
        individually negotiated changes to contractual terms, such as 
        individually-modified workouts or renegotiations of amounts 
        owed by a consumer under an open end consumer credit plan.
            ``(5) Regulations.--The Board, in consultation with the 
        other agencies described in section 108 and the Federal Trade 
        Commission, may prescribe regulations to implement this 
        subsection, including--
                    ``(A) specifying the format for posting the 
                agreements on the creditor's Internet site; and
                    ``(B) establishing exceptions to paragraphs (1) and 
                (2) in cases where the administrative burden outweighs 
                the benefit of increased transparency, such as where a 
                credit card plan has a de minimis number of consumer 
                account holders''.

SEC. 11. ENHANCED MINIMUM PAYMENT DISCLOSURES.

    Paragraph (11) of section 127(b) of the Truth in Lending Act (15 
U.S.C. 1637(b)(11)) is amended to read as follows:
            ``(11) Minimum payment disclosures.--
                    ``(A) Minimum payment warning.--A written statement 
                in the following form: `Minimum Payment Warning: Making 
                only the minimum payment will increase the interest you 
                pay and the time it takes to repay your balance.'.
                    ``(B) Information on outstanding balance.--Not less 
                than once per calendar quarter, such billing statement 
                shall also include repayment information that would 
                apply to the outstanding balance of the consumer under 
                the credit plan, including--
                            ``(i) the number of months (rounded to the 
                        nearest month) that it would take to pay the 
                        entire amount of that balance, if the consumer 
                        pays only the required minimum monthly payments 
                        and if no further advances are made;
                            ``(ii) the total cost to the consumer, 
                        including interest payments, of paying that 
                        balance in full, if the consumer pays only the 
                        required minimum monthly payments and if no 
                        further advances are made;
                            ``(iii) the monthly payment amount that 
                        would be required for the consumer to eliminate 
                        the outstanding balance in 12 months, 24 
                        months, and 36 months, if no further advances 
                        are made, and the total cost to the consumer, 
                        including interest and principal payments, of 
                        paying that balance in full if the consumer 
                        pays the balance over 12, 24, or 36 months, 
                        respectively; and
                            ``(iv) a toll-free telephone number at 
                        which the consumer may receive information 
                        about accessing credit counseling and debt 
                        management services.
                    ``(C) Exception to requirements of subsection 
                (b).--The quarterly disclosure requirements in 
                subsection (B) shall not apply with respect to--
                            ``(i) a calendar quarter if, in the 2 
                        consecutive billing cycles preceding the end of 
                        such quarter, a consumer has paid the entire 
                        balance of the bill in full;
                            ``(ii) a calendar quarter if, at the end of 
                        the calendar quarter, a consumer has an 
                        outstanding credit balance of zero or has a 
                        positive credit; or
                            ``(iii) any class of consumers for which 
                        the Board has determined will not benefit 
                        substantially from additional disclosures.
                    ``(D) Applicable rates to be used in disclosures.--
                            ``(i) In general.--Subject to clause (ii), 
                        in making the disclosures under subparagraph 
                        (B), the creditor shall apply the interest rate 
                        or rates in effect on the date on which the 
                        disclosure is made until the date on which the 
                        balance would be paid in full.
                            ``(ii) Special rule in case of temporary 
                        rate.--If the interest 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 
                        interest rate in effect on the date on which 
                        the disclosure is made for as long as that 
                        interest rate will apply under that contractual 
                        provision, and then apply an interest rate 
                        based on the index or formula in effect on the 
                        applicable billing date.
                    ``(E) Form and prominence of disclosure.--All of 
                the information described in subparagraph (B) shall--
                            ``(i) be disclosed in the form and manner 
                        which the Board shall prescribe, by regulation, 
                        and in a manner that avoids duplication; and
                            ``(ii) be placed in a conspicuous and 
                        prominent location on the billing statement in 
                        conspicuous typeface.
                    ``(F) Tabular format.--In the regulations 
                prescribed under subparagraph (D), the Board shall 
                require that the disclosure of such information shall 
                be in the form of a table that--
                            ``(i) contains clear and concise headings 
                        for each item of such information; and
                            ``(ii) provides a clear and concise form 
                        stating each item of information required to be 
                        disclosed under each such heading.
                    ``(G) Location and order of table.--In prescribing 
                the form of the table under subparagraph (E), the Board 
                shall require that--
                            ``(i) 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 paragraph; and
                            ``(ii) the items required to be included in 
                        the table shall be listed in the order in which 
                        such items are described in subparagraph (B).
                    ``(H) Substitution of terminology.--In prescribing 
                the form of the table under subparagraph (D), the Board 
                may employ terminology which is different than the 
                terminology used in subparagraph (B), if such 
                terminology is more easily understood and conveys 
                substantially the same meaning.
                    ``(I) `Rounding' regulations.--For purposes of 
                determining whether an error in the disclosures 
                required by subparagraph (B) constitutes a legal cause 
                of action against a creditor or any other party, the 
                standard referred to under the heading `Rounding 
                assumed payments, current balance and interest charges 
                to the nearest cent' in the publication by the Board in 
                the Federal Register (74 Fed. Reg. 5385) on January 29, 
                2009, of the final regulation revising part 226 of 
                title 12 of the Code of Federal Regulations (Regulation 
                Z), or a standard that affords substantially similar 
                protections as determined by the Board, shall apply for 
                purposes of the determination with regard to such 
                disclosures.''.

SEC. 12. BOARD REVIEW OF CONSUMER CREDIT PLANS AND REGULATIONS.

    (a) Required Review.--Not later than 2 years after the effective 
date of this Act and every 2 years thereafter, except as provided in 
subsection (c)(2), the Board shall conduct a review, within the limits 
of its existing resources available for reporting purposes of the 
consumer credit card market including--
            (1) the terms of credit card agreements and the practices 
        of credit card issuers;
            (2) the effectiveness of disclosure of terms, fees, and 
        other expense of credit card plans;
            (3) the adequacy of protections against unfair or deceptive 
        acts or practices relating to credit card plans, and
            (4) whether or not, and to what extent, the Credit 
        Cardholders' Bill of Rights Act of 2009 has resulted in--
                    (A) higher annual percentage rates of interest, on 
                average, for credit card users than the average of such 
                rates of interest in effect before the effective date 
                of the Act;
                    (B) the imposition of annual fees or other credit 
                card fees--
                            (i) that did not exist before such 
                        effective date;
                            (ii) at a higher average rate of 
                        applicability than existed before such 
                        effective date; or
                            (iii) with higher average costs to the 
                        consumer than were in effect before such 
                        effective date;
                    (C) an increase in the rate of denial of--
                            (i) new credit card accounts for consumers; 
                        or
                            (ii) new extensions of credit, or 
                        additional lines of credit, for existing credit 
                        accounts established before such effective 
                        date; or
                    (D) any other adverse or negative condition or 
                effect on consumers.
    (b) Solicitation of Public Comment.--In connection with conducting 
the review required by subsection (a), the Board shall solicit comment 
from consumers, credit card issuers, and other interested parties, such 
as through hearings or written comments.
    (c) Regulations.--
            (1) Notice.--Following the review required by subsection 
        (a) the Board shall publish a notice in the Federal Register 
        that--
                    (A) summarizes the review, the comments received 
                from the public solicitation, and other evidence 
                gathered by the Board such as through consumer testing 
                or other research; and
                    (B) either--
                            (i) proposes new or revised regulations or 
                        interpretations to update or revise disclosures 
                        and protections for consumer credit cards as 
                        appropriate; or
                            (ii) states the reason for the Board's 
                        determination that new or revised regulations 
                        are not proposed.
            (2) Revision of review period following material revision 
        of regulations.--In the event the Board materially revises 
        regulations on consumer credit card plans, a review need not be 
        conducted until 2 years following the effective date of the 
        revised regulations, which thereafter shall become the new date 
        for the biennial review required by subsection (a).
    (d) Board Report to the Congress.--The Board shall report to the 
Congress no less frequently than every 2 years, except as provided in 
subsection (c)(2), on the status of its most recent review, its efforts 
to address any issues identified from the review, and any 
recommendations for legislation.
    (e) Additional Reporting.--The Federal banking agencies and the 
Federal Trade Commission shall provide annually to the Board, and the 
Board shall include in its annual report to Congress under section 10 
of the Federal Reserve Act, information about the supervisory and 
enforcement activities of the agencies with respect to credit card 
issuers' compliance with applicable Federal consumer protection 
statutes and regulations including--
            (1) this Act, the amendments made by this Act, and 
        regulations prescribed under this Act and such amendments; and
            (2) section 5 of the Federal Trade Commission Act, and 
        regulations prescribed under the Federal Trade Commission Act, 
        such as part 227 of title 12 of the Code of Federal Regulations 
        as prescribed by the Board (Regulation AA).

SEC. 13. SOLICITATIONS REQUIRED TO INCLUDE WARNING ON ADVERSE EFFECTS 
              OF EXCESSIVE CREDIT INQUIRIES.

    Section 127(c)(1)(B) of the Truth in Lending Act (15 U.S.C. 
1637(c)(1)(B)) is amended by adding at the end the following new 
clause:
                            ``(iv) Excessive credit inquiries.--A 
                        warning that excessive credit inquiries, which 
                        occur in connection with credit applications 
                        and solicitations and under other 
                        circumstances, can have an adverse effect on a 
                        consumer credit score.''.

SEC. 14. READABILITY REQUIREMENT.

    Section 122 of the Truth in Lending Act (U.S.C. 1632) is amended by 
adding at the end the following new subsection:
    ``(d) Minimum Type-Size and Font Requirement for Credit Card 
Applications and Disclosures.--All written information, provisions, and 
terms in or on any application, solicitation, contract, or agreement 
for any credit card account under an open end consumer credit plan, and 
all written information included in or on any disclosure required under 
this chapter with respect to any such account, shall appear--
            ``(1) in not less than 12-point type; and
            ``(2) in any font other than a font which the Board has 
        designated, in regulations under this section, as a font that 
        inhibits readability.''.

SEC. 15. REPORT TO CONGRESS ON REDUCTIONS OF CONSUMER CREDIT CARD 
              LIMITS BASED ON CERTAIN INFORMATION AS TO EXPERIENCE OR 
              TRANSACTIONS OF THE CONSUMER.

    (a) Report on Creditor Practices Required.--Before the end of the 
6-month period beginning on the date of the enactment of this Act, the 
Board of Governors of the Federal Reserve System, in consultation with 
the Comptroller of the Currency, the Director of the Office of Thrift 
Supervision, the Federal Deposit Insurance Corporation, the National 
Credit Union Administration Board, and the Federal Trade Commission, 
shall report to the Committee on Financial Services of the House of 
Representatives and the Committee on Banking, Housing, and Urban 
Affairs of the Senate on the extent to which, during the 3-year period 
ending on such date of enactment, creditors have reduced credit limits 
or raised interest rates applicable to credit card accounts under open 
end consumer credit plans based on--
            (1) the geographical location where a credit transaction 
        with the consumer takes place or the identity of the merchant 
        involved in the transaction;
            (2) the consumer's credit transactions, including the type 
        of credit transaction, the type of items purchased in such 
        transaction, the price of items purchased in such transaction, 
        any change in the type or price of items purchased in such 
        transactions, and other data pertaining to the consumer's use 
        of such credit card account; and
            (3) the identity of the mortgage creditor which extended or 
        holds the mortgage loan secured by the consumer's primary 
        residence.
    (b) Other Information.--The report required under subsection (a) 
shall also include--
            (1) the number and identity of creditors that have engaged 
        in the practices described in subsection (a);
            (2) the extent to which the practices described in 
        subsection (a) have an adverse impact on minority or low-income 
        consumers;
            (3) any other relevant information regarding such 
        practices; and
            (4) recommendations to the Congress on regulatory or 
        statutory changes that may be needed to restrict or prevent 
        such practices.

SEC. 16. PROCEDURE FOR TIMELY SETTLEMENTS OF DECEDENT OBLIGORS' 
              ESTATES.

    (a) In General.--Chapter 2 of the Truth in Lending Act ( U.S.C. 
1631 et seq.) is amended by adding at the end the following new 
section:
``Sec. 140A Procedure for timely settlements of decedent obligors' 
              estates
    ``The Board, in consultation with the Federal Trade Commission and 
each other agency referred to in section 108(a), shall prescribe 
regulations to require any creditor, with respect to any credit card 
account under an open end consumer credit plan, to establish procedures 
to ensure that any administrator of an estate of any deceased obligor 
with respect to such account can resolve outstanding credit balances in 
a timely manner.''.
    (b) Clerical Amendment.--The table of sections for chapter 2 of the 
Truth in Lending Act is amended by inserting after the item relating to 
section 140 the following new item:

``140A. Procedure for timely settlements of decedent obligors' 
                            estates.''.

SEC. 17. INTERIM IMPLEMENTATION REPORTS TO THE CONGRESS.

    The Chairman of the Board of Governors of the Federal Reserve 
System shall submit a report each 90 days after the date of the 
enactment of this Act on the level of implementation of the regulations 
required to be prescribed under this Act to the Committee on Financial 
Services of the House of Representatives and the Committee on Banking, 
Housing, and Urban Affairs of the Senate until the Chairman can report 
full industry implementation.

SEC. 18. DISCLOSURE REQUIREMENT FOR STORES ACCEPTING CREDIT CARD 
              ACCOUNT APPLICATIONS.

    (a) In General.--Section 122 of the Truth in Lending Act (15 U.S.C. 
1632) is amended by adding at the end the following:
    ``(d) Signs Required on Certain Premises Where Credit Card Account 
Applications Accepted.--
            ``(1) In general.--A person who sells personal property to 
        consumers on a business premises and makes available to 
        consumers on such premises any application to open a credit 
        card account under an open end consumer credit plan, and where 
        such person is the issuer of such account, shall display in the 
        premises on a sign any information that is subject to 
        subsection (c) and that is required to be disclosed by the 
        person on that application.
            ``(2) Format.--Such information shall be displayed on the 
        sign in the form and manner which the Board shall prescribe by 
        regulations and which, to the extent practicable and 
        appropriate, shall be consistent with the form and manner 
        required for the disclosure of such information on the credit 
        card application.
            ``(3) Sign placement.--Such signs shall be conspicuously 
        placed at each location on the premises where the credit card 
        application may be submitted by the consumer.''.
    (b) Conforming Amendment.--Section 111(e) of the Truth in Lending 
Act (15 U.S.C. 1610(e)) is amended by adding at the end the following:
    ``Section 122(d) shall supersede State laws relating to store 
display of the information that is subject to the requirements of such 
section, except that any State may employ or establish State laws for 
the purpose of enforcing the requirements of such section.''.

SEC. 19. EFFECTIVE DATE.

    (a) In General.--Except as provided in subsection (c) for the 
period described in such subsection, the amendments made by this Act 
shall apply to all credit card accounts under open end consumer credit 
plans after the earlier of--
            (1) the end of the 12-month period beginning on the date of 
        the enactment of this Act; or
            (2) June 30, 2010.
    (b) Regulations.--Except as provided in subsection (c) for the 
period described in such subsection, the Board of Governors of the 
Federal Reserve System, in consultation with the Comptroller of the 
Currency, the Director of the Office of Thrift Supervision, the Federal 
Deposit Insurance Corporation, the National Credit Union Administration 
Board, and the Federal Trade Commission, shall prescribe regulations, 
in final form, implementing the amendments made by this Act before the 
earlier of--
            (1) the end of the 5-month period beginning on the date of 
        the enactment of this Act; or
            (2) June 1, 2010.
    (c) Interim Effective Period for Advance Notices of Rate 
Increases.--
            (1) In general.--During the period beginning 90 days after 
        the date of the enactment of this Act and ending on the 
        effective date of all the amendments under this Act as 
        determined pursuant to subsection (a), no increase in any 
        annual percentage rate of interest on any credit card account 
        under an open end consumer credit plan (as such terms are 
        defined in the Truth in Lending Act) may take effect unless the 
        creditor provides a written notice to the consumer at least 45 
        days before the increase would otherwise take effect which 
        fully describes the changes in the annual percentage rate, in a 
        complete and conspicuous manner, and the extent to which such 
        increase would apply to an existing balance.
            (2) Exceptions.--A notice shall not be required under 
        paragraph (1) for an increase in an annual percentage rate 
        described in subparagraph (A), (B), or (C) of section 
        127B(b)(1) (as added by section 2).
            (3) Regulations.--The Board of Governors of the Federal 
        Reserve System shall prescribe regulations implementing the 
        amendment referred to in paragraph (1), for purposes of this 
        subsection, before the end of the 60-day period beginning on 
        the date of the enactment of this Act.

            Passed the House of Representatives April 30, 2009.

            Attest:

                                                                 Clerk.
111th CONGRESS

  1st Session

                               H. R. 627

_______________________________________________________________________

                                 AN ACT

  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.