[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 414 Introduced in Senate (IS)]
111th CONGRESS
1st Session
S. 414
To amend the Consumer Credit Protection Act, to ban abusive credit
practices, enhance consumer disclosures, protect underage consumers,
and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
February 11, 2009
Mr. Dodd (for himself, Mr. Levin, Mr. Menendez, Mr. Reed, Mr. Akaka,
Mr. Schumer, Mr. Tester, Mr. Brown, Mr. Merkley, Mr. Kerry, Mr. Leahy,
Mr. Durbin, Mr. Harkin, Mrs. McCaskill, Mr. Whitehouse, and Mr. Casey)
introduced the following bill; which was read twice and referred to the
Committee on Banking, Housing, and Urban Affairs
_______________________________________________________________________
A BILL
To amend the Consumer Credit Protection Act, to ban abusive credit
practices, enhance consumer disclosures, protect underage consumers,
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; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Credit Card
Accountability Responsibility and Disclosure Act of 2009'' or the
``Credit CARD Act of 2009''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Regulatory authority.
TITLE I--CONSUMER PROTECTION
Sec. 101. Prior notice of rate increases required.
Sec. 102. Freeze on interest rate terms and fees on canceled cards.
Sec. 103. Limits on fees and interest charges.
Sec. 104. Consumer right to reject card before notice is provided of
open account.
Sec. 105. Use of terms clarified.
Sec. 106. Application of card payments.
Sec. 107. Length of billing period.
Sec. 108. Prohibition on universal default and unilateral changes to
cardholder agreements.
Sec. 109. Enhanced penalties.
Sec. 110. Enhanced oversight.
Sec. 111. Clerical amendments.
TITLE II--ENHANCED CONSUMER DISCLOSURES
Sec. 201. Payoff timing disclosures.
Sec. 202. Requirements relating to late payment deadlines and
penalties.
Sec. 203. Renewal disclosures.
TITLE III--PROTECTION OF YOUNG CONSUMERS
Sec. 301. Extensions of credit to underage consumers.
Sec. 302. Restrictions on certain affinity cards.
Sec. 303. Protection of young consumers from prescreened credit offers.
TITLE IV--FEDERAL AGENCY COORDINATION
Sec. 401. Inclusion of all Federal banking agencies.
TITLE V--MISCELLANEOUS PROVISIONS
Sec. 501. Study and report.
Sec. 502. Credit Card Safety Rating System Commission.
SEC. 2. REGULATORY AUTHORITY.
The Board of Governors of the Federal Reserve System (in this Act
referred to as the ``Board'') may issue such rules and publish such
model forms as it considers necessary to carry out this Act and the
amendments made by this Act.
TITLE I--CONSUMER PROTECTION
SEC. 101. PRIOR NOTICE OF RATE INCREASES REQUIRED.
Section 127 of the Truth in Lending Act (15 U.S.C. 1637) is amended
by adding at the end the following:
``(i) Advance Notice of Increase in Interest Rate Required.--
``(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 (other than an increase due to the
expiration of any introductory percentage rate, or due solely
to a change in another rate of interest to which such rate is
indexed)--
``(A) may take effect before the beginning of the
billing cycle which begins not earlier than 45 days
after the date on which the obligor receives notice of
such increase; or
``(B) may apply to any outstanding balance of
credit under such plan, as of the effective date of the
increase required under subparagraph (A).
``(2) Notice of right to cancel.--The notice referred to in
paragraph (1) shall be made in a clear and conspicuous manner,
and shall contain a brief statement of the right of the obligor
to cancel the account before the effective date of the
increase.''.
SEC. 102. FREEZE ON INTEREST RATE TERMS AND FEES ON CANCELED CARDS.
Section 127 of the Truth in Lending Act (15 U.S.C. 1637) is amended
by adding at the end the following:
``(j) Freeze on Interest Rate Terms and Fees on Canceled Cards.--
``(1) In general.--If an obligor under an open end consumer
credit plan closes or cancels a credit card account, the
repayment of the outstanding balance after the cancellation
shall be subject to all terms and conditions in effect for the
obligor immediately before the card was closed or cancelled,
including the annual percentage rate and the minimum payment
terms in effect immediately prior to such closure or
cancellation.
``(2) Rule of construction.--Closure or cancellation of an
account by the obligor shall not constitute a default under an
existing cardholder agreement, and shall not trigger an
obligation to immediately repay the obligation in full.''.
SEC. 103. LIMITS ON FEES AND INTEREST CHARGES.
Section 127 of the Truth in Lending Act (15 U.S.C. 1637) is amended
by adding at the end the following:
``(k) Prohibition on Penalties for On-Time Payments.--If an open
end consumer credit plan provides a time period within which an obligor
may repay any portion of the credit extended without incurring an
interest charge, and the obligor repays all or a portion of such credit
within the specified time period, the creditor may not impose or
collect an interest charge on the portion of the credit that was repaid
within the specified time period.
``(l) 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 from completing any over-the-limit transaction
that will result in a fee or constitute a default under the
credit agreement, 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 date on which the consumer notifies the creditor
in accordance with paragraph (2), and shall remain effective
until the consumer revokes the election.
``(4) Notification system.--Each creditor that maintains
credit card accounts under an open end consumer credit plan
shall establish and maintain a notification system, including a
toll-free telephone number, Internet address, and Worldwide
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 election--
``(A) in the periodic statement required under
subsection (b) with respect to such account at least
once each calendar year; and
``(B) in any such periodic statement which includes
a notice of the imposition of an over-the-limit fee
during the period covered by the statement.
``(6) No fees if consumer has made an election.--If a
consumer has made an election under paragraph (1), no over-the-
limit fee may be imposed on the account for any reason that has
caused the outstanding balance in the account to exceed the
credit limit.
``(m) Over-the-Limit Fee Restrictions.--With respect to a credit
card account under an open end consumer credit plan, an over-the-limit
fee, as described in subsection (c)(1)(B)(iii)--
``(1) may be imposed on the account only when an extension
of credit obtained by the obligor causes the credit limit on
such account to be exceeded, and may not be imposed when such
credit limit is exceeded due to a fee or interest charge; and
``(2) may be imposed only once during a billing cycle if,
on the last day of such billing cycle, the credit limit on the
account is exceeded, and may not be imposed in a subsequent
billing cycle with respect to such excess credit, unless the
obligor has obtained an additional extension of credit in
excess of such credit limit during such subsequent cycle.
``(n) No Interest Charges on Fees.--With respect to a credit card
account under an open end consumer credit plan, if the creditor imposes
a transaction fee on the obligor, including a cash advance fee, late
fee, over-the-limit fee, or balance transfer fee, the creditor may not
impose or collect interest with respect to such fee amount.
``(o) Limits on Certain Fees.--
``(1) No fee to pay a billing statement.--With respect to a
credit card account under an open end consumer credit plan, the
creditor may not impose a separate fee to allow the obligor to
repay an extension of credit or finance charge, whether such
repayment is made by mail, electronic transfer, telephone
authorization, or other means.
``(2) Reasonable fees for violations.--The amount of any
fee or charge that a card issuer may impose in connection with
any omission with respect to, or violation of, the cardholder
agreement, including any late payment fee, over the limit fee,
increase in the applicable annual percentage rate, or any
similar fee or charge, shall be reasonably related to the cost
to the card issuer of such omission or violation.
``(3) Reasonable currency exchange fee.--With respect to a
credit card account under an open end consumer credit plan, the
creditor may impose a fee for exchanging United States currency
with foreign currency in an account transaction, only if--
``(A) such fee reasonably reflects the costs
incurred by the creditor to perform such currency
exchange;
``(B) the creditor discloses publicly its method
for calculating such fee; and
``(C) the primary Federal regulator of such
creditor determines that the method for calculating
such fee complies with this paragraph.''.
SEC. 104. CONSUMER RIGHT TO REJECT CARD BEFORE NOTICE IS PROVIDED OF
OPEN ACCOUNT.
Section 127 of the Truth in Lending Act (15 U.S.C. 1637) is amended
by adding at the end the following:
``(p) Consumer Right To Reject Card Before Notice of New Account Is
Provided to Consumer Reporting Agency.--A creditor may not furnish any
information to a consumer reporting agency (as defined in section 603)
concerning a newly opened credit card account under an open end
consumer credit plan until the credit card has been used or activated
by the consumer.''.
SEC. 105. USE OF TERMS CLARIFIED.
Section 127 of the Truth in Lending Act (15 U.S.C. 1637) is amended
by adding at the end the following:
``(q) 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
specified clearly and conspicuously 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).''.
SEC. 106. APPLICATION OF CARD PAYMENTS.
Section 164 of the Truth in Lending Act (15 U.S.C. 1666c) is
amended--
(1) by striking the section heading and all that follows
through ``Payments'' and inserting the following:
``Sec. 164. Prompt and fair crediting of payments
``(a) In General.--Payments'';
(2) by inserting ``, by 5:00 p.m. on the date on which such
payment is due,'' after ``in readily identifiable form'';
(3) by striking ``manner, location, and time'' and
inserting ``manner, and location''; and
(4) by adding at the end the following:
``(b) Application of Payments.--Upon receipt of a payment from a
cardholder, the card issuer shall--
``(1) apply the payment first to the card balance bearing
the highest rate of interest, and then to each successive
balance bearing the next highest rate of interest, until the
payment is exhausted; and
``(2) after complying with paragraph (1), apply the payment
in a way that minimizes the amount of any finance charge to the
account.
``(c) Changes by Card Issuer.--If a card issuer makes a material
change in the mailing address, office, or procedures for handling
cardholder payments, and such change causes a material delay in the
crediting of a cardholder payment made during the 60-day period
following the date on which such change took effect, the card issuer
may not impose any late fee or finance charge for a late payment on the
credit card account to which such payment was credited.
``(d) 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 card issuer not less than 7 days before the due
date contained in the periodic statement 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.''.
SEC. 107. LENGTH OF BILLING PERIOD.
Section 163(a) of the Truth in Lending Act (15 U.S.C. 1668(a)) is
amended by striking ``mailed at least fourteen days prior'' and
inserting ``mailed at least 21 days prior''.
SEC. 108. PROHIBITION ON UNIVERSAL DEFAULT AND UNILATERAL CHANGES TO
CARDHOLDER AGREEMENTS.
(a) In General.--Chapter 4 of the Truth in Lending Act (15 U.S.C.
1666 et seq.) is amended--
(1) by redesignating section 171 as section 173; and
(2) by inserting after section 170 the following:
``SEC. 171. LIMITS ON INTEREST RATE INCREASES.
``(a) In General.--No card issuer may increase any annual
percentage rate, fee, or finance charge applicable to a credit card
account under an open end consumer credit plan, or terminate early a
lower introductory rate, fee, or charge, except as permitted under this
section.
``(b) Exceptions.--The limitation under subsection (a) shall not
apply to--
``(1) an increase due to the scheduled expiration of an
introductory term;
``(2) an increase in a variable annual percentage rate,
fee, or finance charge in accordance with a credit card
agreement that provides for changes according to an index or
formula;
``(3) an increase due to a specific, material action or
omission of a consumer in violation of an agreement that is
directly related to such account and that is specified in the
contract or agreement as grounds for an increase, except that--
``(A) the creditor may not take into account
information not directly related to the account,
including adverse information concerning the consumer,
information in any consumer report, or changes in the
credit score of the consumer; and
``(B) an increase described in this paragraph shall
terminate not later than 6 months after the date on
which it is imposed, if the consumer commits no further
violations; or
``(4) a change that takes effect upon renewal of the card
in accordance with section 172.
``(c) Map to Lower Rate.--
``(1) In general.--A card issuer that increases an annual
percentage rate, fee, or finance charge pursuant to subsection
(b)(3) shall include, together with the notice of such increase
under section 127(i), a statement, provided in a clear and
conspicuous manner--
``(A) of the discrete, specific action or omission
of the consumer on which the increase was based; and
``(B) that the increase will terminate in 6 months
if the consumer does not commit further violations.
``(2) Board authority.--The Board may, by rule, provide for
exceptions to the requirements of subsection (b)(3)(B), if the
Board determines that there are other appropriate factors that
creditors may consider in determining the appropriate annual
percentage rate for particular consumers.
``SEC. 172. UNILATERAL CHANGES IN CREDIT CARD AGREEMENT PROHIBITED.
``A card issuer may not amend or change the terms of a credit card
contract or agreement under an open end consumer credit plan, until
after the date on which the credit card will expire if not renewed.''.
(b) Clerical Amendment.--The table of sections for chapter 4 of the
Truth in Lending Act is amended by striking the item relating to
section 171 and inserting the following:
``171. Universal defaults prohibited.
``172. Unilateral changes in credit card agreement prohibited.
``173. Applicability of State laws.''.
SEC. 109. ENHANCED PENALTIES.
Section 130(a)(2)(A) of the Truth in Lending Act (15 U.S.C.
1640(a)(2)(A)) is amended by striking ``or (iii) in the'' and inserting
the following: ``(iii) in the case of an individual action relating to
an open end consumer credit plan that is not secured by real property
or a dwelling, twice the amount of any finance charge in connection
with the transaction, with a minimum of $500 and a maximum of $5,000,
or such higher amount as may be appropriate in the case of an
established pattern or practice of such failures; or (iv) in the''.
SEC. 110. ENHANCED OVERSIGHT.
(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:
``(r) Evaluation of Credit Card Policies and Procedures.--
``(1) In general.--In connection with its examination of a
credit card issuer under its supervision, each agency referred
to in paragraphs (1), (2), and (3) of section 108(a) shall
conduct, as appropriate, an evaluation of the credit card
policies and procedures used by such card issuer to ensure
compliance with this section and sections 163, 164, 171, and
172. Such agency shall promptly require the card issuer to take
any corrective action needed to address any violations of any
such section.
``(2) Annual reports to congress.--Each year, each agency
referred to in subsections (a) and (c) of section 108 shall
submit a report to Congress concerning the administration of
its functions under this section, including such
recommendations as the agency deems necessary or appropriate.
Each such report shall include an assessment of the extent to
which compliance with the requirements of this section is being
achieved and a summary of the enforcement actions taken by the
agency assigned administrative enforcement responsibilities
under subsections (a) and (c) of section 108.''.
(b) Strengthened Credit Card Information Collection.--Section
136(b) of the Truth in Lending Act (15 U.S.C. 1646(b)) is amended--
(1) in paragraph (1)--
(A) by striking ``The Board shall'' and inserting
the following:
``(A) In general.--The Board shall''; and
(B) by adding at the end the following:
``(B) Information to be included.--The information
under subparagraph (A) shall include, as of a date
designated by the Board--
``(i) a list of each type of transaction or
event for which one or more of the card issuers
has imposed a separate interest rate upon a
cardholder, including purchases, cash advances,
and balance transfers;
``(ii) for each type of transaction or
event identified under clause (i)--
``(I) each distinct interest rate
charged by the card issuer to a
cardholder, as of the designated date;
``(II) the number of cardholders to
whom each such interest rate was
applied during the calendar month
immediately preceding the designated
date, and the total amount of interest
charged to such cardholders at each
such rate during such month;
``(III) the number of cardholders
who are paying the stated default
annual percentage rate applicable in
cases in which the account is past due
or the account holder is otherwise in
violation of the terms of the account
agreement; and
``(IV) the number of cardholders
who are paying above such stated
default annual percentage rate;
``(iii) a list of each type of fee that one
or more of the card issuers has imposed upon a
cardholder as of the designated date, including
any fee imposed for obtaining a cash advance,
making a late payment, exceeding the credit
limit on an account, making a balance transfer,
or exchanging United States dollars for foreign
currency;
``(iv) for each type of fee identified
under clause (iii), the number of cardholders
upon whom the fee was imposed during the
calendar month immediately preceding the
designated date, and the total amount of fees
imposed upon cardholders during such month;
``(v) the total number of cardholders that
incurred any interest charge or any fee during
the calendar month immediately preceding the
designated date; and
``(vi) any other information related to
interest rates, fees, or other charges that the
Board deems of interest.''; and
(2) by adding at the end the following:
``(5) Report to congress.--The Board shall, on an annual
basis, transmit to Congress and make public a report containing
an assessment by the Board of the profitability of credit card
operations of depository institutions. Such report shall
include estimates by the Board of the approximate, relative
percentage of income derived by such operations from--
``(A) the imposition of interest rates on
cardholders, including separate estimates for--
``(i) interest with an annual percentage
rate of less than 25 percent; and
``(ii) interest with an annual percentage
rate equal to or greater than 25 percent;
``(B) the imposition of fees on cardholders;
``(C) the imposition of fees on merchants; and
``(D) any other material source of income, while
specifying the nature of that income.''.
SEC. 111. CLERICAL AMENDMENTS.
Section 103(i) of the Truth in Lending Act (15 U.S.C. 1602(i)) is
amended--
(1) by striking ``term'' and all that follows through
``means'' and inserting the following: ``terms `open end credit
plan' and `open end consumer credit plan' mean''; and
(2) in the second sentence, by inserting ``or open end
consumer credit plan'' after ``credit plan'' each place that
term appears.
TITLE II--ENHANCED CONSUMER DISCLOSURES
SEC. 201. PAYOFF TIMING DISCLOSURES.
(a) In General.--Section 127(b)(11) of the Truth in Lending Act (15
U.S.C. 1637(b)(11)) is amended to read as follows:
``(11)(A) A written statement in the following form:
`Minimum Payment Warning: Making only the minimum payment will
increase the interest rate you pay and the time it takes to
repay your balance.'.
``(B) 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 and principal payments, of paying that balance
in full, if the consumer pays only the required minimum
monthly payments and if no further advances are made;
and
``(iii) the monthly payment amount that would be
required for the consumer to eliminate the outstanding
balance in 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 36 months.
``(C)(i) 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) 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.
``(D) 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 typeface that is
at least as large as the largest type on the statement.
``(E) 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.
``(F) 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 set forth in subparagraph (B).
``(G) In prescribing the form of the table under
subparagraph (D), the Board shall employ terminology which is
different than the terminology which is employed in
subparagraph (B), if such terminology is more easily understood
and conveys substantially the same meaning.''.
(b) Civil Liability.--Section 130(a) of the Truth in Lending Act
(15 U.S.C. 1640(a)) is amended, in the undesignated paragraph following
paragraph (4), by striking the second sentence and inserting the
following: ``In connection with the disclosures referred to in
subsections (a) and (b) of section 127, a creditor shall have a
liability determined under paragraph (2) only for failing to comply
with the requirements of section 125, 127(a), or any of paragraphs (4)
through (13) of section 127(b), or for failing to comply with
disclosure requirements under State law for any term or item that the
Board has determined to be substantially the same in meaning under
section 111(a)(2) as any of the terms or items referred to in section
127(a), or any of paragraphs (4) through (13) of section 127(b).''.
SEC. 202. REQUIREMENTS RELATING TO LATE PAYMENT DEADLINES AND
PENALTIES.
Section 127(b)(12) of the Truth in Lending Act (15 U.S.C.
1637(b)(12)) is amended to read as follows:
``(12) Requirements relating to late payment deadlines and
penalties.--
``(A) Late payment deadline and postmark date
required to be disclosed.--In the case of a credit card
account under an open end consumer credit plan under
which a late fee or charge may be imposed due to the
failure of the obligor to make payment on or before the
due date for such payment, the periodic statement
required under subsection (b) with respect to the
account shall include, in a conspicuous location on the
billing statement--
``(i) the date on which the payment is due
or, if different, the date on which a late
payment fee will be charged, together with the
amount of the fee or charge to be imposed if
payment is made after that date; and
``(ii) the date by which the payment must
be postmarked, if paid by mail, in order to
avoid the imposition of a late payment fee with
respect to the payment, and a statement to that
effect.
``(B) Disclosure of increase in interest rates for
late payments.--If 1 or more late payments under an
open end consumer credit plan may result in an increase
in the annual percentage rate applicable to the
account, the statement required under subsection (b)
with respect to the account shall include conspicuous
notice of such fact, together with the applicable
penalty annual percentage rate, in close proximity to
the disclosure required under subparagraph (A) of the
date on which payment is due under the terms of the
account.
``(C) Requirements relating to postmark date.--
``(i) In general.--The date included in a
periodic statement pursuant to subparagraph
(A)(ii) with regard to the postmark on a
payment shall allow, in accordance with
regulations prescribed by the Board under
clause (ii), a reasonable time for the consumer
to make the payment and a reasonable time for
the delivery of the payment by the due date.
``(ii) Board regulations.--The Board shall
prescribe guidelines for determining a
reasonable period of time for making a payment
and delivery of a payment for purposes of
clause (i), after consultation with the
Postmaster General of the United States and
representatives of consumer and trade
organizations.
``(D) Payments at local branches.--If the creditor,
in the case of a credit card account referred to in
subparagraph (A), is a financial institution which
maintains branches or offices at which payments on any
such account are accepted from the obligor in person,
the date on which the obligor makes a payment on the
account at such branch or office shall be considered to
be the date on which the payment is made for purposes
of determining whether a late fee or charge may be
imposed due to the failure of the obligor to make
payment on or before the due date for such payment.''.
SEC. 203. RENEWAL DISCLOSURES.
Section 127(d) of the Truth in Lending Act (15 U.S.C. 1637(d)) is
amended--
(1) by striking paragraph (2);
(2) by redesignating paragraph (3) as paragraph (2); and
(3) in paragraph (1), by striking ``Except as provided in
paragraph (2), a card issuer'' and inserting the following: ``A
card issuer that has changed or amended any term of the account
since the last renewal or''.
TITLE III--PROTECTION OF YOUNG CONSUMERS
SEC. 301. 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:
``(8) Applications from underage consumers.--
``(A) Prohibition on issuance.--No credit card may
be issued to, or open end consumer credit plan
established by or on behalf of, a consumer who has not
attained the age of 21, unless the consumer has
submitted a written application to the card issuer that
meets the requirements of subparagraph (B).
``(B) Application requirements.--An application to
open a credit card account by an individual who has not
attained the age of 21 as of the date of submission of
the application shall require--
``(i) the signature of the parent, legal
guardian, or any other individual over the age
of 21 having a means to repay debts incurred by
the consumer in connection with the account,
indicating joint liability for debts incurred
by the consumer in connection with the account
before the consumer has attained the age of 21;
``(ii) submission by the consumer of
financial information indicating an independent
means of repaying any obligation arising from
the proposed extension of credit in connection
with the account; or
``(iii) completion of a certified financial
literacy or financial education course designed
for young consumers.
``(C) Certified financial literacy or education
courses for young consumers.--
``(i) In general.--The Secretary of the
Treasury, acting through the Office of
Financial Literacy and Education (in this
subparagraph referred to as `OFE'), shall make
and publish a list of all courses and programs
that have been certified for financial literacy
or financial education purposes appropriate for
young consumers. When developing the
certification criteria the OFE shall take into
account the course or program's--
``(I) proven track record in
producing changed consumer behavior;
and
``(II) use of practices or
curricula that have been shown to
change consumer behavior.
``(ii) Explicit eligibility.--Courses taken
that are offered or required by colleges,
universities, and high schools may be certified
by the OFE for purposes of this subparagraph,
as well as other programs and courses. The OFE
shall make an effort to provide certification
to all types of programs and courses, including
those that are conducted by nonprofit, faith-
based, or for-profit institutions and State and
local governments.
``(iii) Select programs.--From among those
courses or programs that are certified by the
OFE under this subparagraph, the OFE may
designate a select number of programs or
courses that produce results that are far
better than those produced by other certified
programs as `highly certified'.''.
SEC. 302. RESTRICTIONS ON CERTAIN AFFINITY CARDS.
Section 127 of the Truth in Lending Act (15 U.S.C. 1637), as
amended by this Act, is amended by adding at the end the following:
``(s) Restrictions on Issuance of Affinity Cards to Students.--No
credit card account under an open end consumer credit plan may be
established by an individual who has not attained the age of 21 as of
the date of submission of the application pursuant to any direct or
indirect agreement relating to affinity cards, as defined by the Board,
between the creditor and an institution of higher education, as defined
in section 101(a) of the Higher Education Act of 1965 (20 U.S.C.
1001(a)), unless the requirements of subsection (c)(8) are met with
respect to the obligor.''.
SEC. 303. PROTECTION OF YOUNG CONSUMERS FROM PRESCREENED CREDIT OFFERS.
(a) In General.--Section 604(c)(1)(B) of the Fair Credit Reporting
Act (15 U.S.C. 1681b(c)(1)(B)) is amended--
(1) in clause (ii), by striking ``and'' at the end; and
(2) in clause (iii), by striking the period at the end and
inserting the following: ``; and
``(iv) the consumer report indicates that the
consumer is age 21 or older, except that a consumer who
is at least 18 years of age may elect, in accordance
with subsection (e)(7), to authorize the consumer
reporting agency to include the name and address of the
consumer in any list of names provided by the agency
pursuant to this paragraph.''.
(b) Opt-In for Young Consumers.--Section 604(e) of the Fair Credit
Reporting Act (15 U.S.C. 1681b(e)) is amended--
(1) by striking the subsection heading and inserting the
following:
``(e) Election of Consumers Regarding Lists.--''; and
(2) by adding at the end the following:
``(7) Opt-in for underage consumers.--
``(A) In general.--A consumer who is at least 18
years of age, but has not attained his or her 21st
birthday, may elect to have the name and address of the
consumer included in any list provided by a consumer
reporting agency under subsection (c)(1)(B) in
connection with a credit or insurance transaction that
is not initiated by the consumer by notifying the
agency in accordance with subparagraph (B) that the
consumer consents to the use of a consumer report
relating to the consumer in connection with any credit
or insurance transaction that is not initiated by the
consumer.
``(B) Manner of notification.--An election by a
consumer described in subparagraph (A) shall be in
writing, using a signed notice of election form issued
or made available electronically by the consumer
reporting agency at the request of the consumer for
purposes of this paragraph.
``(C) Effectiveness of election.--An election by a
consumer under subparagraph (A) to be included in a
list provided by a consumer reporting agency--
``(i) shall be effective until the earlier
of--
``(I) the 21st birthday of the
consumer; or
``(II) the date on which the
consumer notifies the agency, through
the notification system established by
the agency under paragraph (5), that
the election is no longer effective;
and
``(ii) shall be effective with respect to
each affiliate of the agency.
``(D) Rule of construction.--An election by a
consumer under subparagraph (A) to be included in a
list provided by a consumer reporting agency may not be
construed to limit the applicability of this subsection
to any person age 21 or older, and the consumer may
elect to be excluded from any such list after the
attainment of his or her 21st birthday in the manner
otherwise provided under this subsection.''.
TITLE IV--FEDERAL AGENCY COORDINATION
SEC. 401. INCLUSION OF ALL FEDERAL BANKING AGENCIES.
(a) In General.--Section 18(f)(1) of the Federal Trade Commission
Act (15 U.S.C. 57a(f)(1)) is amended in the second sentence--
(1) by striking ``The Board of Governors of the Federal
Reserve System (with respect to banks) and the Federal Home
Loan Bank Board (with respect to savings and loan institutions
described in paragraph (3)) and the National Credit Union
Administration Board (with respect to Federal credit unions
described in paragraph (4))'' and inserting ``Each appropriate
Federal banking agency''; and
(2) by inserting ``in consultation with the Commission''
after ``shall prescribe regulations''.
(b) FTC Concurrent Rulemaking.--Section 18(f)(1) of the Federal
Trade Commission Act (15 U.S.C. 57a(f)(1)) is amended by inserting
after the second sentence the following: ``Notwithstanding any other
provision of this section, whenever such agencies commence such a
rulemaking proceeding, the Commission, with respect to the entities
within its jurisdiction under this Act, may commence a rulemaking
proceeding and prescribe regulations in accordance with section 553 of
title 5, United States Code. The Commission, the Federal banking
agencies, and the National Credit Union Administration Board shall
consult and coordinate with each other so that the regulations
prescribed by each such agency are consistent with and comparable to
the regulations prescribed by each other such agency, to the extent
practicable.''.
(c) Preservation of State Law.--Section 18(f)(6) of the Federal
Trade Commission Act (15 U.S.C. 57a(f)(6)) is amended to read as
follows:
``(6) Notwithstanding any other provision of this
subsection or any other provision of law, regulations
promulgated under this subsection shall be considered
supplemental to State laws governing unfair and deceptive acts
and practices, and may not be construed to preempt any
provision of State law that provides equal or greater
protections.''.
(d) GAO Study and Report.--Not later than 18 months after the date
of enactment of this Act, the Comptroller General shall transmit to
Congress a report on the status of regulations of the Federal banking
agencies and the National Credit Union Administration regarding unfair
and deceptive acts or practices by depository institutions and Federal
credit unions.
(e) Technical and Conforming Amendments.--Section 18(f) of the
Federal Trade Commission Act (15 U.S.C. 57a(f)) is amended--
(1) in the subsection heading, by striking ``Board'' and
all that follows through ``Administration'' and inserting
``Appropriate Federal Banking Agencies'';
(2) in paragraph (1), in the first sentence--
(A) by striking ``banks or savings and loan
institutions described in paragraph (3), each agency
specified in paragraph (2) or (3) of this subsection
shall establish'' and inserting ``depository
institutions or Federal credit unions, each appropriate
Federal banking agency shall establish''; and
(B) by striking ``banks or savings and loan
institutions described in paragraph (3), subject to its
jurisdiction'' and inserting ``the depository
institutions or Federal credit unions subject to the
jurisdiction of such appropriate Federal banking
agency'';
(3) in paragraph (1), in the final sentence--
(A) by striking ``each such Board'' and inserting
``each such appropriate Federal banking agency'';
(B) by striking ``banks or savings and loan
institutions described in paragraph (3), or Federal
credit unions described in paragraph (4), as the case
may be,'' each place that term appears and inserting
``depository institutions or Federal credit unions
subject to the jurisdiction of such appropriate Federal
banking agency'';
(C) by striking ``(A) any such Board'' and
inserting ``(A) any such appropriate Federal banking
agency''; and
(D) by striking ``with respect to banks, savings
and loan institutions'' and inserting ``with respect to
depository institutions'';
(4) in paragraph (2)(C), by inserting ``than'' after
``(other'';
(5) in paragraph (3), by inserting ``by the Director of the
Office of Thrift Supervision'' before the period at the end;
(6) in paragraph (4), by inserting ``by the National Credit
Union Administration'' before the period at the end;
(7) in paragraph (6), by striking ``the Board of Governors
of the Federal Reserve System'' and inserting ``any Federal
banking agency or the National Credit Union Administration
Board''; and
(8) by adding at the end the following new paragraph:
``(8) For purposes of this subsection--
``(A) the term `appropriate Federal banking agency'
has the same meaning as in section 3 of the Federal
Deposit Insurance Act, and includes the National Credit
Union Administration Board with respect to Federal
credit unions;
``(B) the terms `depository institution' and
`Federal banking agency' have the same meanings as in
section 3 of the Federal Deposit Insurance Act (12
U.S.C. 1813); and
``(C) the term `Federal credit union' has the same
meaning as in section 101 of the Federal Credit Union
Act (12 U.S.C. 1752).''.
TITLE V--MISCELLANEOUS PROVISIONS
SEC. 501. STUDY AND REPORT.
(a) Study Required.--The Comptroller General (in this section
referred to as the ``Comptroller'') shall conduct a study on
interchange fees and their effects on consumers and merchants. The
Comptroller shall review--
(1) the extent to which interchange fees are required to be
disclosed to consumers and merchants, and how such fees are
overseen by the Federal banking agencies or other regulators;
(2) the ways in which the interchange system affects the
ability of merchants of varying size to negotiate pricing with
card associations and banks;
(3) the costs and factors incorporated into interchange
fees, such as advertising, bonus miles, and rewards, how such
costs and factors vary among cards; and
(4) the consequences of the undisclosed nature of
interchange fees on merchants and consumers with regard to
prices charged for goods and services.
(b) Report Required.--Not later than 180 days after the date of
enactment of this Act, the Comptroller shall submit a report to the
Committee on Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of Representatives
containing a detailed summary of the findings and conclusions of the
study required by this section, together with such recommendations for
legislative or administrative actions as may be appropriate.
SEC. 502. CREDIT CARD SAFETY RATING SYSTEM COMMISSION STUDY.
(a) Definition.--In this section, the term ``safety'' refers to the
amount of risk to cardholders that results from credit card practices
and terms in credit card agreements that are either not well understood
by consumers, or are not easily understood, or could have an adverse
financial effect on consumers, other than interest rates, periodic
fees, or rewards.
(b) Establishment of Safety Rating System.--The Comptroller General
of the United States (in this section referred to as the
``Comptroller'') shall establish an entity to be known as the ``Credit
Card Safety Rating System Commission'' (in this section referred to as
the ``Commission'').
(c) Duties.--The duties of the Commission shall be--
(1) to determine if a rating system to allow cardholders to
quickly assess the level of safety of credit card agreements
would be beneficial to consumers;
(2) to assess the impact on credit card transparency and
consumer safety of various rating system policy options,
including--
(A) the use of a 5-star rating system to reflect
the relative safety of card terms, marketing and
customer service practices, and product features;
(B) making the use of the system mandatory for all
cards;
(C) requiring a graphic display of rating on all
marketing material, applications, billing statements,
and agreements associated with that credit card, as
well as on the back of each such credit card;
(D) requiring an annual review of the safety rating
system, to determine whether the point system is
effectively aiding consumers and encouraging
transparent competition and fairness to consumers; and
(E) requiring consumer access to ratings through
public website and other outreach programs;
(3) if it is deemed beneficial, to make recommendations to
Congress concerning how such a system should be devised;
(4) to study the effects of such system on the availability
and affordability of credit and the implications of changes in
credit availability and affordability in the United States and
in the general market for credit services due to the rating
system; and
(5) by not later than March 1 of the second year after the
date of enactment of this Act, to submit a report to Congress
containing detailed results and recommendations, including how
to create such system, if creating such system is recommended.
(d) Membership.--
(1) Number and appointment.--The Commission shall be
composed of 15 members appointed by the Comptroller, in
accordance with this section.
(2) Qualifications.--
(A) In general.--The membership of the Commission,
subject to subparagraph (B), shall include
individuals--
(i) who have achieved national recognition
for their expertise in credit cards, debt
management, economics, credit availability,
consumer protection, and other credit card
related issues and fields; and
(ii) who provide a mix of different
professions, a broad geographic representation,
and a balance between urban and rural
representatives.
(B) Makeup of commission.--The Commission shall be
comprised of--
(i) 4 representatives from consumer groups;
(ii) 4 representatives from credit card
issuers or banks;
(iii) 7 representatives from nonprofit
research entities or nonpartisan experts in
banking and credit cards; and
(iv) not fewer than 1 of the members
described in clauses (i) through (iii) who
represents each of--
(I) the elderly;
(II) economically disadvantaged
consumers;
(III) racial or ethnic minorities;
and
(IV) students and minors.
(C) Ethics disclosures.--The Comptroller shall
establish a system for public disclosure by members of
the Commission of financial and other potential
conflicts of interest relating to such members. Members
of the Commission shall be treated in the same manner
as employees of Congress whose pay is disbursed by the
Secretary of the Senate for purposes of title I of the
Ethics in Government Act of 1978 (Public Law 95-521).
(3) Chairperson; vice chairperson.--The Comptroller shall
designate a member of the Commission, at the time of
appointment of the member as Chairperson and a member as Vice
Chairperson for that term of appointment, except that in the
case of vacancy in the position of Chairperson or Vice
Chairperson of the Commission, the Comptroller may designate
another member for the remainder of the term of that member.
(4) Terms.--Members of the Commission shall be appointed
for the life of the Commission. Any vacancies shall not affect
the power and duties of the Commission but shall be filled in
the same manner as the original appointment.
(5) Compensation.--
(A) Members.--While serving on the business of the
Commission (including travel time), a member of the
Commission shall be entitled to compensation at the per
diem equivalent of the rate provided for level IV of
the Executive Schedule under section 5315 of title 5,
United States Code, and while so serving away from home
and the regular place of business of the member, the
member may be allowed travel expenses, as authorized by
the Chairperson.
(B) Other employees.--For purposes of pay (other
than pay of members of the Commission) and employment
benefits, rights, and privileges, all employees of the
Commission shall be treated as if they were employees
of the United States Senate.
(6) Meetings.--The Commission shall meet at the call of the
Chairperson.
(e) Director and Staff; Experts and Consultants.--Subject to such
review as the Comptroller determines necessary to assure the efficient
administration of the Commission, the Commission may--
(1) employ and fix the compensation of an Executive
Director (subject to the approval of the Comptroller General)
and such other personnel as may be necessary to carry out its
duties (without regard to the provisions of title 5, United
States Code, governing appointments in the competitive
service);
(2) seek such assistance and support as may be required in
the performance of its duties from appropriate Federal
departments and agencies;
(3) enter into contracts or make other arrangements, as may
be necessary for the conduct of the work of the Commission
(without regard to section 3709 of the Revised Statutes of the
United States (41 U.S.C. 5));
(4) make advance, progress, and other payments which relate
to the work of the Commission;
(5) provide transportation and subsistence for persons
serving without compensation; and
(6) prescribe such rules and regulations as it determines
necessary with respect to the internal organization and
operation of the Commission.
(f) Powers.--
(1) Obtaining official data.--The Commission may secure
directly from any department or agency of the United States
information necessary to enable it to carry out this section.
Upon request of the Chairperson, the head of that department or
agency shall furnish that information to the Commission on an
agreed upon schedule.
(2) Data collection.--In order to carry out its functions,
the Commission shall--
(A) utilize existing information, both published
and unpublished, where possible, collected and assessed
either by its own staff or under other arrangements
made in accordance with this section;
(B) carry out, or award grants or contracts for,
original research and experimentation, where existing
information is inadequate; and
(C) adopt procedures allowing any interested party
to submit information for the Commission's use in
making reports and recommendations.
(3) Access of gao information.--The Comptroller shall have
unrestricted access to all deliberations, records, and
nonproprietary data of the Commission, immediately upon
request.
(4) Periodic audit.--The Commission shall be subject to
periodic audit by the Comptroller.
(g) Administrative and Support Services.--The Comptroller shall
provide such administrative and support services to the Commission as
may be necessary to carry out this section.
(h) Authorization of Appropriations.--There are authorized to be
appropriated to the Commission such sums as may be necessary to carry
out this section.
<all>