[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 627 Reported in House (RH)]
Union Calendar No. 41
111th CONGRESS
1st Session
H. R. 627
[Report No. 111-88]
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
January 22, 2009
Mrs. Maloney (for herself, Mr. Frank of Massachusetts, Mr. Jones, Mr.
Kanjorski, Ms. Waters, Mr. Gutierrez, Mr. Ackerman, Mr. Capuano, Mr.
Ellison, Mr. Davis of Tennessee, Mr. Cleaver, Mr. George Miller of
California, Mr. Obey, Mr. DeFazio, Mr. Hinojosa, Mr. McGovern, Mr.
Yarmuth, Mr. Olver, Ms. Edwards of Maryland, Mr. Courtney, Ms. DeLauro,
Mr. Kennedy, Mrs. Lowey, Mr. Brady of Pennsylvania, Mr. Chandler, Mr.
Loebsack, Mr. Pascrell, Mr. Bishop of New York, Mr. Filner, Mr.
Carnahan, Mr. Weiner, Mr. Markey of Massachusetts, Mr. Grijalva, Mr.
Cummings, Ms. Schakowsky, Mr. Gene Green of Texas, Mr. Moran of
Virginia, Ms. Sutton, Mr. Hinchey, Ms. Bordallo, Ms. Lee of California,
Mr. Welch, and Mr. Higgins) introduced the following bill; which was
referred to the Committee on Financial Services
April 27, 2009
Additional sponsors: Mr. Lynch, Ms. Woolsey, Mr. Sherman, Ms. Matsui,
Mr. Rahall, Mr. Doggett, Mr. Nye, Ms. Zoe Lofgren of California, Mr.
Stupak, Mr. Berman, Mr. Inslee, Mr. Gonzalez, Ms. Eshoo, Ms. Shea-
Porter, Ms. Tsongas, Mr. Visclosky, Mr. Wu, Ms. Clarke, Ms. Hirono, Mr.
Cohen, Mr. Schauer, Ms. Norton, Mr. Lipinski, Mr. Maffei, Mr. Kratovil,
Ms. Pingree of Maine, Mr. Delahunt, Mr. Blumenauer, Mr. Arcuri, Mr.
Langevin, Mr. Hall of New York, Mr. Davis of Illinois, Mr. Abercrombie,
Mr. Jackson of Illinois, Mr. Schiff, Mr. Miller of North Carolina, Mr.
Taylor, Mr. Braley of Iowa, Mr. Bishop of Georgia, Mr. Waxman, Mr.
Baca, Mr. Honda, Mr. Serrano, Mrs. Davis of California, Mr. Watt, Mr.
Levin, Mr. Stark, Mr. Van Hollen, Mr. Lewis of Georgia, Ms. Harman, Mr.
Hastings of Florida, Mr. Al Green of Texas, Mr. Johnson of Georgia, Ms.
Castor of Florida, Ms. Kilroy, Mr. Massa, Mr. Lujan, Mr. Kissell, Mr.
Boswell, Mrs. Dahlkemper, Mr. Patrick J. Murphy of Pennsylvania, Ms.
Markey of Colorado, Mr. Walz, Ms. Giffords, Mr. Pierluisi, Mr. Tonko,
Mr. Quigley, Mr. Larson of Connecticut, Mr. Nadler of New York, Mr.
Barrow, Mr. Connolly of Virginia, Ms. Fudge, and Mr. Teague
April 27, 2009
Reported with an amendment, committed to the Committee of the Whole
House on the State of the Union, and ordered to be printed
[Strike out all after the enacting clause and insert the part printed
in italic]
[For text of introduced bill, see copy of bill as introduced on January
22, 2009]
_______________________________________________________________________
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 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 14th 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.
``(d) 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 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:
``(h) Consumer Right To Reject Card Before Notice of New Account Is
Provided to Consumer Reporting Agency.--
``(1) In general.--A creditor may not furnish any
information 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
until the credit card has been used or activated by the
consumer.
``(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 applied using 1 of the following
methods:
``(A) High-to-low method.--The excess amount is
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.
``(B) Pro rata method.--The excess amount is
allocated among each of the portions of such balance
which bear different rates of interest in the same
proportion as each such portion of the outstanding
balance bears to the total outstanding balance.
``(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.''.
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-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 creditor receives notice from the consumer in
accordance with paragraph (2) and shall remain effective until
the consumer revokes the election.
``(4) Notification system.--
``(A) In general.--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 website, 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).
``(B) Small issuers.--Notwithstanding subparagraph
(A), any credit card issuer which issues fewer than
50,000 credit cards in conjunction with credit card
accounts under open end consumer credit plans shall
establish and maintain a notification system, which
shall include a toll-free telephone number, Internet
address, or website, 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) on the periodic statement required under
section 127(b) with respect to such account at least
once each calendar year; and
``(B) on 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.
``(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 paragraph:
``(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.
``(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.''.
SEC. 8. PROHIBIT FEES FOR PAYMENT ON CREDIT CARD ACCOUNTS BY ELECTRONIC
FUND TRANSFERS.
(a) In General.--Section 127 of the Truth in Lending Act (15 U.S.C.
1637) is amended by adding at the end the following new subsection:
``(i) Payments by EFT.--In the case of a credit card account under
an open end consumer credit plan, a creditor may not impose a fee based
on the manner in which payment on the account is made, including a fee
for making any such payment by electronic fund transfer (as defined in
section 903).''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to all payments made after the date of the enactment of this Act
and any fee imposed after such date in contravention of the amendment
shall be promptly credited to the consumer's account.
SEC. 9. 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. 10. 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.
Union Calendar No. 41
111th CONGRESS
1st Session
H. R. 627
[Report No. 111-88]
_______________________________________________________________________
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.
_______________________________________________________________________
April 27, 2009
Reported with an amendment, committed to the Committee of the Whole
House on the State of the Union, and ordered to be printed