[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>