[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 627 Engrossed in House (EH)]
111th CONGRESS
1st Session
H. R. 627
_______________________________________________________________________
AN ACT
To amend the Truth in Lending Act to establish fair and transparent
practices relating to the extension of credit under an open end
consumer credit plan, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Credit Cardholders' Bill of Rights
Act of 2009''.
SEC. 2. CREDIT CARDS ON TERMS CONSUMERS CAN REPAY.
(a) Retroactive Rate Increases and Universal Default Limited.--
Chapter 2 of the Truth in Lending Act (15 U.S.C. 1631 et seq.) is
amended by inserting after section 127A the following new section:
``Sec. 127B. Additional requirements for credit card accounts under an
open end consumer credit plan
``(a) Retroactive Rate Increases and Universal Default Limited.--
``(1) In general.--Except as provided in subsection (b), no
creditor may increase any annual percentage rate of interest
applicable to the existing balance on a credit card account of
the consumer under an open end consumer credit plan.
``(2) Existing balance defined.--For purposes of this
subsection and subsections (b) and (c), the term `existing
balance' means the amount owed on a consumer credit card
account as of the end of the 7th day after the creditor
provides notice of an increase in the annual percentage rate in
accordance with subsection (c).
``(3) Treatment of existing balances following rate
increase.--If a creditor increases any annual percentage rate
of interest applicable to the credit card account of a consumer
under an open end consumer credit plan and there is an existing
balance in the account to which such increase may not apply,
the creditor shall allow the consumer to repay the existing
balance using a method provided by the creditor which is at
least as beneficial to the consumer as 1 of the following
methods:
``(A) An amortization period for the existing
balance of at least 5 years starting from the date on
which the increased annual percentage rate went into
effect.
``(B) The percentage of the existing balance that
was included in the required minimum periodic payment
before the rate increase cannot be more than doubled.
``(4) Limitation on certain fees.--If--
``(A) a creditor increases any annual percentage
rate of interest applicable on a credit card account of
the consumer under an open end consumer credit plan;
and
``(B) the creditor is prohibited by this section
from applying the increased rate to an existing
balance,
the creditor may not assess any fee or charge based solely on
the existing balance.''.
(b) Exceptions to the Amendment Made by Subsection (a).--Section
127B of the Truth in Lending Act is amended by inserting after
subsection (a) (as added by subsection (a)) the following new
subsection:
``(b) Exceptions.--
``(1) In general.--A creditor may increase any annual
percentage rate of interest applicable to the existing balance
on a credit card account of the consumer under an open end
consumer credit plan only under the following circumstances:
``(A) Change in index.--The increase is due solely
to the operation of an index that is not under the
creditor's control and is available to the general
public.
``(B) Expiration of promotional rate.--The increase
is due solely to the expiration of a promotional rate.
``(C) Failure to comply with workout plan.--The
increase is due solely to the fact the consumer failed
to comply with a negotiated workout plan with the
creditor.
``(D) Payment not received during 30-day grace
period after due date.--The increase is due solely to
the fact that any consumer's minimum payment has not
been received within 30 days after the due date for
such minimum payment.
``(2) Limitation on increases due to failure to comply with
workout plan.--Notwithstanding paragraph (1)(C), the annual
percentage rate in effect with respect to each category of
transactions for a credit card account under an open end
consumer credit plan after the increase permitted under such
subsection due to the failure of a consumer to comply with a
workout plan may not exceed the annual percentage applicable to
such category of transactions on the day before the effective
date of the workout plan.
``(3) Standards required.--The Board shall prescribe, by
regulation, standards--
``(A) for entering into any workout plan applicable
to any credit card account under an open end consumer
credit plan; and
``(B) governing any such workout plan.''.
(c) Advance Notice of Rate Increases and Significant Contract
Changes.--Section 127B of the Truth in Lending Act is amended by
inserting after subsection (b) (as added by subsection (b)) the
following new subsections:
``(c) Advance Notice of Rate Increases.--
``(1) In general.--In the case of any credit card account
under an open end consumer credit plan, no increase in any
annual percentage rate of interest (other than an increase
described in subsection (b)(1)(A)) may take effect unless the
creditor provides a written notice to the consumer at least 45
days before the increase takes effect which fully describes the
changes in the annual percentage rate, in a complete and
conspicuous manner, and the extent to which such increase would
apply to an existing balance.
``(2) Limitation on rate increase notices within first
year.--Except in the case of an increase described in
subparagraph (B), (C), or (D) of subsection (b)(1), no written
notice under paragraph (1) of an increase in any annual
percentage rate of interest on any credit card account under an
open end consumer credit plan (for which notice is required
under such paragraph) shall be effective before the end of the
1-year period beginning when the account is opened.
``(3) Minimum term for promotional rates.--In the case of a
promotional rate, no written notice under paragraph (1) of an
increase in any annual percentage rate of interest on any
credit card account under an open end consumer credit plan
shall be effective before the end of a 6-month period beginning
from the date the promotional rate takes effect.
``(d) Advance Notice of Account Closure.--
``(1) In general.--In the case of any credit card account
under an open end consumer credit plan, a creditor may not
close such account unless the creditor provides a written
notice to the consumer at least 30 days before the closure
takes place, and which notifies the consumer--
``(A) of the reason the account is being closed;
``(B) of any recourse that the consumer may take to
prevent the account from being closed;
``(C) of any program under which the consumer may
repay the balance on the account over a period of time;
and
``(D) that if the consumer's account is closed, it
may have an impact on the consumer's credit score.
``(2) Exception.--The requirements of paragraph (1) shall
not apply in the case of a consumer request that the creditor
close such account.
``(e) Advance Notice of Significant Contract Changes.--In the case
of any credit card account under an open end consumer credit plan, no
significant change to the contract (such as any fee) may take effect
unless the creditor provides a written notice of at least 45 days
before the change takes effect which fully describes the changes in the
contract, in a complete and conspicuous manner.''.
(d) Clerical Amendment.--The table of sections for chapter 2 of the
Truth in Lending Act (15 U.S.C. 1631 et seq.) is amended by inserting
after the item relating to section 127A the following new item:
``127B. Additional requirements for credit card accounts under an open
end consumer credit plan.''.
SEC. 3. ADDITIONAL PROVISIONS REGARDING ACCOUNT FEATURES, TERMS, AND
PRICING.
(a) Double Cycle Billing Prohibited.--Section 127B of the Truth in
Lending Act is amended by inserting after subsection (d) (as added by
section 2(c)) the following new subsection:
``(e) Double Cycle Billing.--
``(1) In general.--No finance charge may be imposed by a
creditor with respect to any balance on a credit card account
under an open end consumer credit plan that is based on
balances for days in billing cycles preceding the most recent
billing cycle as a result of the loss of any grace period.
``(2) Exceptions.--Paragraph (1) shall not apply so as to
prohibit a creditor from--
``(A) adjusting finance charges following the
return of a payment for insufficient funds; or
``(B) adjusting finance charges following
resolution of a billing error dispute.
``(3) Grace period.--For purposes of this subsection, the
term `grace period' means, with respect to any credit card
account under an open end consumer credit plan, the time
period, if any, provided by the creditor within which any
credit extended under such credit plan for purchases of goods
or services may be repaid by the consumer without incurring a
finance charge.''.
(b) Limitations Relating to Account Balances Attributable Only to
Accrued Interest.--Section 127B is amended by inserting after
subsection (e) (as added by subsection (a)) the following new
subsection:
``(f) Limitations Relating to Account Balances Attributable Only to
Accrued Interest.--
``(1) In general.--If the outstanding balance on a credit
card account under an open end consumer credit plan at the end
of a billing period represents an amount attributable only to
interest accrued during the preceding billing period on an
outstanding balance that was fully repaid during the preceding
billing period--
``(A) no fee may be imposed or collected in
connection with such balance attributable only to
interest before such end of the billing period; and
``(B) any failure to make timely repayments of the
balance attributable only to interest before such end
of the billing period shall not constitute a default on
the account.
Such balance remains a legally binding debt obligation.
``(2) Rule of construction.--Paragraph (1) shall not be
construed as affecting--
``(A) the consumer's obligation to pay any accrued
interest on a credit card account under an open end
consumer credit plan; or
``(B) the accrual of interest on the outstanding
balance on any such account in accordance with the
terms of the account and this title.''.
(c) Access to Payoff Balance Information.--Section 127B of the
Truth in Lending Act is amended by inserting after subsection (f) (as
added by subsection (b)) the following new subsection:
``(g) Payoff Balance Information.--
``(1) In general.--Each periodic statement provided by a
creditor to a consumer with respect to a credit card account
under an open end consumer credit plan shall contain the toll-
free telephone number, Internet address, and website at which
the consumer may request the payoff balance on the account.
``(2) Small issuers.--Notwithstanding paragraph (1), in the
case of any credit card issuer which issues fewer than 50,000
credit cards in conjunction with credit card accounts under
open end consumer credit plans, each periodic statement
provided by such a creditor to a consumer with respect to any
such credit card account shall contain the toll-free telephone
number, Internet address, or website at which the consumer may
request the payoff balance on the account.''.
(d) Consumer Right To Reject Card After Notice Is Provided of Open
Account.--Section 127B of the Truth in Lending Act is amended by
inserting after subsection (g) (as added by subsection (c)) the
following new subsection:
``(h) Consumer Right To Reject Card After Notice of New Account Is
Provided to Consumer Reporting Agency.--
``(1) In general.--A creditor shall remove any information
furnished to a consumer reporting agency (as defined in section
603) concerning the establishment of a newly opened credit card
account under an open end consumer credit plan if the consumer
has not used or activated the account and the consumer contacts
the creditor within 45 days of the establishment of the account
to close the account.
``(2) Rule of construction.--Paragraph (1) shall not be
construed as prohibiting a creditor from furnishing information
about any application for a credit card account under an open
end consumer credit plan or any inquiry about any such account
to a consumer reporting agency (as so defined).''.
(e) Use of Terms Clarified.--Section 127B of the Truth in Lending
Act is amended by inserting after subsection (h) (as added by
subsection (d)) the following new subsection:
``(i) Use of Terms.--The following requirements shall apply with
respect to the terms of any credit card account under any open end
consumer credit plan:
``(1) `Fixed' rate.--The term `fixed', when appearing in
conjunction with a reference to the annual percentage rate or
interest rate applicable with respect to such account, may only
be used to refer to an annual percentage rate or interest rate
that will not change or vary for any reason over the period
clearly and conspicuously specified in the terms of the
account.
``(2) Prime rate.--The term `prime rate', when appearing in
any agreement or contract for any such account, may only be
used to refer to the bank prime rate published in the Federal
Reserve Statistical Release on selected interest rates (daily
or weekly), and commonly referred to as the H.15 release (or
any successor publication).
``(3) Due date.--
``(A) In general.--Each periodic statement for any
such account shall contain a date by which the next
periodic payment on the account must be made to avoid a
late fee or be considered a late payment, and any
payment received by 5 p.m., local time at the location
specified by the creditor for the receipt of payment,
on such date shall be treated as a timely payment for
all purposes.
``(B) Certain electronic fund transfers.--Any
payment with respect to any such account made by a
consumer online to the website of the credit card
issuer or by telephone directly to the credit card
issuer before 5 p.m., local time at the location
specified by the creditor for the receipt of payment,
on any business day shall be credited to the consumer's
account that business day.
``(C) Presumption of timely payment.--Any evidence
provided by a consumer in the form of a receipt from
the United States Postal Service or other common
carrier indicating that a payment on a credit card
account was sent to the issuer not less than 7 days
before the due date contained in the periodic statement
under subparagraph (A) for such payment shall create a
presumption that such payment was made by the due date,
which may be rebutted by the creditor for fraud or
dishonesty on the part of the consumer with respect to
the mailing date.''.
(f) Payment Allocations.--Section 127B of the Truth in Lending Act
is amended by inserting after subsection (i) (as added by subsection
(e)) the following new subsection:
``(j) Payment Allocations.--
``(1) In general.--If 2 or more different annual percentage
rates apply to different portions of an outstanding balance on
a credit card account under an open end consumer credit plan,
the amount of any periodic payment in excess of the required
minimum payment shall be allocated first to the balance with
the highest annual percentage rate and any remaining portion is
allocated to any other balance in descending order, based on
the applicable annual percentage rate each portion of such
balance bears, from the highest such rate to the lowest.
``(2) Clarification relating to certain deferred interest
arrangements.--A creditor may allocate the entire amount paid
by the consumer in excess of the required minimum periodic
payment to a balance on which interest is deferred during the 2
billing cycles immediately preceding the expiration of the
period during which interest is deferred.
``(3) Prohibition on restricted grace periods under certain
circumstances.--If, with respect to any credit card account
under an open end consumer credit plan, a creditor offers a
time period in which to repay credit extended without incurring
finance charges to cardholders who pay the balance in full, the
creditor may not deny a consumer who takes advantage of a
promotional rate balance or deferred interest rate balance
offer with respect to such an account any such time period for
repaying credit without incurring finance charges.''.
(g) Timely Provision of Periodic Statements.--Section 127B of the
Truth in Lending Act is amended by inserting after subsection (j) (as
added by subsection (f)) the following new subsection:
``(k) Timely Provision of Periodic Statements.--Each periodic
statement with respect to a credit card account under an open end
consumer credit plan shall be sent by the creditor to the consumer not
less than 21 calendar days before the due date identified in such
statement for the next payment on the outstanding balance on such
account, and section 163(a) shall be applied with respect to any such
account by substituting `21' for `fourteen'.''.
(h) Due Dates.--Section 127B of the Truth in Lending Act is amended
by inserting after subsection (k) (as added by subsection (g)) the
following new subsection:
``(l) Due Dates.--If the date established by a creditor as the date
on which a periodic payment on a credit card account under an open end
consumer credit plan is due is a day on which mail is either not
delivered to such creditor or is not accepted by the creditor for
processing on such day, the creditor may not treat the receipt by the
creditor of any such periodic payment by mail as of the next business
day of the creditor as late for any purpose.''.
(i) Availability of Legitimate and Accredited Credit Counseling.--
The Board of Governors of the Federal Reserve System shall suggest
appropriate guidelines for creditors to follow with respect to credit
card accounts under open end consumer credit plans to supply consumer
cardholders with information regarding the availability of legitimate
and accredited credit counseling services.
SEC. 4. CONSUMER CHOICE WITH RESPECT TO OVER-THE-LIMIT TRANSACTIONS.
Section 127B of the Truth in Lending Act is amended by inserting
after subsection (l) (as added by section 3(h)) the following new
subsections:
``(m) Opt-in Required for Over-the-Limit Transactions if Fees Are
Imposed.--
``(1) In general.--In the case of any credit card account
under an open end consumer credit plan under which an over-the-
limit-fee may be imposed by the creditor for any extension of
credit in excess of the amount of credit authorized to be
extended under such account, no such fee shall be charged
unless the consumer has elected to permit the creditor, with
respect to such account, to complete transactions involving the
extension of credit, with respect to such account, in excess of
the amount of credit authorized.
``(2) Disclosure by creditor.--No election by a consumer
under paragraph (1) shall take effect unless the consumer,
before making such election, received a notice from the
creditor of any over-the-limit fee in the form and manner, and
at the time, determined by the Board.
``(3) Form of election.--A consumer may make the election
referred to in paragraph (1) orally or in writing.
``(4) Time of election.--A consumer may make the election
referred to in paragraph (1) at any time and it shall be
effective until the election is revoked by the consumer orally
or in writing.
``(5) Regulations.--
``(A) In general.--The Board shall issue
regulations allowing for the completion of over-the-
limit transactions that for operational reasons exceed
the credit limit by a de minimis amount, even where the
cardholder has not made an election under paragraph
(1).
``(B) Subject to no fee limitation.--The
regulations prescribed under subparagraph (A) shall not
allow for the imposition of any fee or any rate
increase based on the permitted over-the-limit
transactions with respect to the account of any
cardholder who has not made the election in paragraph
(1).
``(C) Disclosures.--The Board shall prescribe
regulations governing any disclosure under this
subsection.
``(n) Over-the-Limit Fee Restrictions.--With respect to a credit
card account under an open end consumer credit plan, an over-the-limit
fee may be imposed only once during a billing cycle if, on the last day
of such billing cycle, the credit limit on the account is exceeded, and
an over-the-limit fee, with respect to such excess credit, may be
imposed only once in each of the 2 subsequent billing cycles, unless
the consumer has obtained an additional extension of credit in excess
of such credit limit during any such subsequent cycle or the consumer
reduces the outstanding balance below the credit limit as of the end of
such billing cycle.
``(o) Over-the-Limit Fees Prohibited in Conjunction With Certain
Credit Holds.--Notwithstanding subsection (n), an over-the-limit fee
may not be imposed if the credit limit was exceeded due to a hold
unless the actual amount of the transaction for which the hold was
placed would have resulted in the consumer exceeding the credit
limit.''.
SEC. 5. STRENGTHEN CREDIT CARD INFORMATION COLLECTION.
Section 136(b) of the Truth in Lending Act (15 U.S.C. 1646(b)) is
amended--
(1) in paragraph (1)--
(A) by striking ``Collection required.--The Board
shall'' and inserting ``Collection required.--
``(A) In general.--The Board shall''.
(B) by adding at the end the following new
subparagraph:
``(B) Information to be included.--The information
under subparagraph (A) shall include, for the relevant
semiannual period, the following information with
respect each creditor in connection with any consumer
credit card account:
``(i) A list of each type of transaction or
event during the semiannual period for which 1
or more creditors has imposed a separate
interest rate upon a consumer credit card
accountholder, including purchases, cash
advances, and balance transfers.
``(ii) For each type of transaction or
event identified under clause (i)--
``(I) each distinct interest rate
charged by the card issuer to a
consumer credit card accountholder
during the semiannual period; and
``(II) the number of cardholders to
whom each such interest rate was
applied during the last calendar month
of the semiannual period, and the total
amount of interest charged to such
accountholders at each such rate during
such month.
``(iii) A list of each type of fee that 1
or more of the creditors has imposed upon a
consumer credit card accountholder during the
semiannual period, including any fee imposed
for obtaining a cash advance, making a late
payment, exceeding the credit limit on an
account, making a balance transfer, or
exchanging United States dollars for foreign
currency.
``(iv) For each type of fee identified
under clause (iii), the number of
accountholders upon whom the fee was imposed
during each calendar month of the semiannual
period, and the total amount of fees imposed
upon cardholders during such month.
``(v) The total number of consumer credit
card accountholders that incurred any finance
charge or any other fee during the semiannual
period.
``(vi) The total number of consumer credit
card accounts maintained by each creditor as of
the end of the semiannual period.
``(vii) The total number and value of cash
advances made during the semiannual period
under a consumer credit card account.
``(viii) The total number and value of
purchases involving or constituting consumer
credit card transactions during the semiannual
period.
``(ix) The total number and amount of
repayments on outstanding balances on consumer
credit card accounts in each month of the
semiannual period.
``(x) The percentage of all consumer credit
card accountholders (with respect to any
creditor) who--
``(I) incurred a finance charge in
each month of the semiannual period on
any portion of an outstanding balance
on which a finance charge had not
previously been incurred; and
``(II) incurred any such finance
charge at any time during the
semiannual period.
``(xi) The total number and amount of
balances accruing finance charges during the
semiannual period.
``(xii) The total number and amount of the
outstanding balances on consumer credit card
accounts as of the end of such semiannual
period.
``(xiii) Total credit limits in effect on
consumer credit card accounts as of the end of
such semiannual period and the amount by which
such credit limits exceed the credit limits in
effect as of the beginning of such period.
``(xiv) Any other information related to
interest rates, fees, or other charges that the
Board deems of interest.''; and
(2) by adding at the end the following new paragraph:
``(5) Report to congress.--The Board shall, on an annual
basis, transmit to Congress and make public a report containing
estimates by the Board of the approximate, relative percentage
of income derived by the credit card operations of depository
institutions from--
``(A) the imposition of interest rates on
cardholders, including separate estimates for--
``(i) interest with an annual percentage
rate of less than 25 percent; and
``(ii) interest with an annual percentage
rate equal to or greater than 25 percent;
``(B) the imposition of fees on cardholders;
``(C) the imposition of fees on merchants; and
``(D) any other material source of income, while
specifying the nature of that income.''.
SEC. 6. STANDARDS APPLICABLE TO INITIAL ISSUANCE OF SUBPRIME OR ``FEE
HARVESTER'' CARDS.
Section 127B of the Truth in Lending Act is amended by inserting
after subsection (o) (as added by section 4) the following new
subsection:
``(p) Standards Applicable to Initial Issuance of Subprime or `Fee
Harvester' Cards.--
``(1) In general.--In the case of any credit card account
under an open end consumer credit plan the terms of which
require the payment of any fee (other than any late fee, any
over-the-limit fee, or any fee for a payment returned for
insufficient funds) by the consumer in the first year the
account is opened in an amount in excess of 25 percent of the
total amount of credit authorized under the account when the
account is opened, no payment of any fee (other than any late
fee, any over-the-limit fee, or any fee for a payment returned
for insufficient funds) may be made from the credit made
available by the card.
``(2) Rule of construction.--No provision of this
subsection may be construed as authorizing any imposition or
payment of advance fees otherwise prohibited by any provision
of law.''.
SEC. 7. EXTENSIONS OF CREDIT TO UNDERAGE CONSUMERS.
Section 127(c) of the Truth in Lending Act (15 U.S.C. 1637(c)) is
amended by adding at the end the following new paragraphs:
``(8) Extensions of credit to underage consumers.--
``(A) In general.--No credit card may be knowingly
issued to, or open end credit plan established on
behalf of, a consumer who has not attained the age of
18, unless the consumer is emancipated under applicable
State law or the parent or legal guardian of such
consumer is designated as the primary account holder.
``(B) Rule of construction.--For the purposes of
determining the age of an applicant, the submission of
a signed application by a consumer stating that the
consumer is over 18 shall be considered sufficient
proof of age.
``(9) Provisions applicable with regard to the issuance of
credit cards to full-time, traditional-aged college students.--
``(A) Definitions.--For purposes of this paragraph,
the following definitions shall apply:
``(i) College student credit card account
defined.--The term `college student credit card
account' means a credit card account under an
open end consumer credit plan established or
maintained for or on behalf of any college
student.
``(ii) College student.--The term `college
student' means an individual--
``(I) who is a full-time student
attending an institution of higher
education; and
``(II) who has attained the age of
18 and has not yet attained the age of
21.
``(iii) Institution of higher education.--
The term `institution of higher education' has
the same meaning as in section 101(a) of the
Higher Education Act of 1965 (20 U.S.C.
1001(a)).
``(B) Maximum amount limitation as a percentage of
gross income.--Unless a parent, legal guardian, or
spouse of a college student assumes joint liability for
debts incurred by the student in connection with a
college student credit card account--
``(i) the amount of credit which may be
extended by any one creditor to the full-time
college student may not exceed, during any full
calendar year, the greater of--
``(I) 20 percent of the annual
gross income of the student; or
``(II) $500; and
``(ii) no creditor shall grant a student a
credit card account, if the credit limit for
that credit card account, combined with the
credit limits of any other credit card accounts
held by the student, would exceed 30 percent of
the annual gross income of the student in the
most recently completed calendar year.
``(C) Parental approval required to increase credit
lines for accounts for which parent is jointly
liable.--No increase may be made in the amount of
credit authorized to be extended under a college
student credit card account for which a parent, legal
guardian, or spouse of the consumer has assumed joint
liability for debts incurred by the consumer in
connection with the account, before the consumer
attains the age of 21, with respect to such consumer,
unless the parent, guardian, or spouse of the consumer,
as applicable, approves in writing, and assumes joint
liability for, such increase.
``(D) Income verification.--For purposes of this
paragraph, a creditor shall require adequate proof of
income, income history, and credit history, subject to
the rules of the Board, before any college student
credit card account may be opened by or on behalf of a
student.
``(E) Prohibition on more than 1 credit card
account for any college student.--No creditor may open
a credit card account for, or issue any credit card to,
any college student who--
``(i) has no verifiable annual gross
income; and
``(ii) already maintains a credit card
account under an open end consumer credit plan
with that creditor, or any affiliate thereof.
``(F) Exemption authority.--The Board may, by rule,
provide for exemptions to the provisions of this
paragraph, as deemed necessary or appropriate by the
Board, consistent with the purposes of this
paragraph.''.
SEC. 8. PROHIBIT FEES FOR PAYMENT ON CREDIT CARD ACCOUNTS BY TELEPHONE
OR ELECTRONIC FUND TRANSFERS.
Section 164 of the Truth in Lending Act (15 U.S.C. 1666c) is
amended--
(1) by striking ``Payments received'' and inserting ``(a)
In General.--Payments received''; and
(2) by adding at the end the following new subsection:
``(b) Payment Fees.--
``(1) Prohibition on fee based on mode of payment.--Except
as provided in paragraph (2), in the case of a credit card
account under an open end consumer credit plan, a creditor may
not impose a fee on the obligor based on the particular manner
in which the obligor makes a payment on such account.
``(2) Exception.--If the obligor requests to make an
expedited payment on a credit card account under an open end
consumer credit plan by telephone on the date that a payment is
due, or the day immediately preceding such date, the creditor
may assess a fee for crediting the payment to the obligor's
account on or by such date.''.
SEC. 9. REGULATIONS RELATING TO ACTIVE DUTY MILITARY CONSUMERS AND
RECENTLY DISABLED VETERANS.
Section 127B of the Truth in Lending Act is amended by inserting
after subsection (p) (as added by section 6) the following new
subsection:
``(q) Regulations Relating to Active Duty Military Consumers and
Recently Disabled Veterans.--In the case of any credit card account,
under an open end consumer credit plan, held by any veteran receiving
compensation for a service-connected disability (as such terms are
defined in section 101 of title 38, United States Code) that occurred
less than 2 years before or any active duty military consumer (as
defined in section 603(q)(2) of this Act) , the Board shall prescribe
regulations that prohibits the creditor with respect to such account
from making adverse reports to any consumer reporting agency with
respect while the consumer maintains status as such a veteran or as an
active duty military consumer.''.
SEC. 10. POSTING INFORMATION ON THE INTERNET.
Section 122 of the Truth in Lending Act ( U.S.C. 1632) is amended
by adding at the end the following new subsection:
``(d) Internet Posting of Credit Card Agreements.--
``(1) Posting agreements.--.A creditor shall establish and
maintain an Internet site on which the creditor will post the
written agreement between the creditor and the consumer for
each open-end consumer credit plan not secured by a dwelling
that has a credit card feature.
``(2) Providing copy of contracts to the board.--A creditor
shall provide to the Board in electronic format, the consumer
credit card agreements that the creditor publishes on the
creditor's Internet site.
``(3) Record repository.--The Board shall establish and
maintain on its publically available Internet site a central
repository of the consumer credit card agreements received from
the creditors pursuant to this subsection and such agreements
shall be easily accessible and retrievable.
``(4) Exception.--Paragraphs (1) and (2) shall not apply to
individually negotiated changes to contractual terms, such as
individually-modified workouts or renegotiations of amounts
owed by a consumer under an open end consumer credit plan.
``(5) Regulations.--The Board, in consultation with the
other agencies described in section 108 and the Federal Trade
Commission, may prescribe regulations to implement this
subsection, including--
``(A) specifying the format for posting the
agreements on the creditor's Internet site; and
``(B) establishing exceptions to paragraphs (1) and
(2) in cases where the administrative burden outweighs
the benefit of increased transparency, such as where a
credit card plan has a de minimis number of consumer
account holders''.
SEC. 11. ENHANCED MINIMUM PAYMENT DISCLOSURES.
Paragraph (11) of section 127(b) of the Truth in Lending Act (15
U.S.C. 1637(b)(11)) is amended to read as follows:
``(11) Minimum payment disclosures.--
``(A) Minimum payment warning.--A written statement
in the following form: `Minimum Payment Warning: Making
only the minimum payment will increase the interest you
pay and the time it takes to repay your balance.'.
``(B) Information on outstanding balance.--Not less
than once per calendar quarter, such billing statement
shall also include repayment information that would
apply to the outstanding balance of the consumer under
the credit plan, including--
``(i) the number of months (rounded to the
nearest month) that it would take to pay the
entire amount of that balance, if the consumer
pays only the required minimum monthly payments
and if no further advances are made;
``(ii) the total cost to the consumer,
including interest payments, of paying that
balance in full, if the consumer pays only the
required minimum monthly payments and if no
further advances are made;
``(iii) the monthly payment amount that
would be required for the consumer to eliminate
the outstanding balance in 12 months, 24
months, and 36 months, if no further advances
are made, and the total cost to the consumer,
including interest and principal payments, of
paying that balance in full if the consumer
pays the balance over 12, 24, or 36 months,
respectively; and
``(iv) a toll-free telephone number at
which the consumer may receive information
about accessing credit counseling and debt
management services.
``(C) Exception to requirements of subsection
(b).--The quarterly disclosure requirements in
subsection (B) shall not apply with respect to--
``(i) a calendar quarter if, in the 2
consecutive billing cycles preceding the end of
such quarter, a consumer has paid the entire
balance of the bill in full;
``(ii) a calendar quarter if, at the end of
the calendar quarter, a consumer has an
outstanding credit balance of zero or has a
positive credit; or
``(iii) any class of consumers for which
the Board has determined will not benefit
substantially from additional disclosures.
``(D) Applicable rates to be used in disclosures.--
``(i) In general.--Subject to clause (ii),
in making the disclosures under subparagraph
(B), the creditor shall apply the interest rate
or rates in effect on the date on which the
disclosure is made until the date on which the
balance would be paid in full.
``(ii) Special rule in case of temporary
rate.--If the interest rate in effect on the
date on which the disclosure is made is a
temporary rate that will change under a
contractual provision applying an index or
formula for subsequent interest rate
adjustment, the creditor shall apply the
interest rate in effect on the date on which
the disclosure is made for as long as that
interest rate will apply under that contractual
provision, and then apply an interest rate
based on the index or formula in effect on the
applicable billing date.
``(E) Form and prominence of disclosure.--All of
the information described in subparagraph (B) shall--
``(i) be disclosed in the form and manner
which the Board shall prescribe, by regulation,
and in a manner that avoids duplication; and
``(ii) be placed in a conspicuous and
prominent location on the billing statement in
conspicuous typeface.
``(F) Tabular format.--In the regulations
prescribed under subparagraph (D), the Board shall
require that the disclosure of such information shall
be in the form of a table that--
``(i) contains clear and concise headings
for each item of such information; and
``(ii) provides a clear and concise form
stating each item of information required to be
disclosed under each such heading.
``(G) Location and order of table.--In prescribing
the form of the table under subparagraph (E), the Board
shall require that--
``(i) all of the information in the table,
and not just a reference to the table, be
placed on the billing statement, as required by
this paragraph; and
``(ii) the items required to be included in
the table shall be listed in the order in which
such items are described in subparagraph (B).
``(H) Substitution of terminology.--In prescribing
the form of the table under subparagraph (D), the Board
may employ terminology which is different than the
terminology used in subparagraph (B), if such
terminology is more easily understood and conveys
substantially the same meaning.
``(I) `Rounding' regulations.--For purposes of
determining whether an error in the disclosures
required by subparagraph (B) constitutes a legal cause
of action against a creditor or any other party, the
standard referred to under the heading `Rounding
assumed payments, current balance and interest charges
to the nearest cent' in the publication by the Board in
the Federal Register (74 Fed. Reg. 5385) on January 29,
2009, of the final regulation revising part 226 of
title 12 of the Code of Federal Regulations (Regulation
Z), or a standard that affords substantially similar
protections as determined by the Board, shall apply for
purposes of the determination with regard to such
disclosures.''.
SEC. 12. BOARD REVIEW OF CONSUMER CREDIT PLANS AND REGULATIONS.
(a) Required Review.--Not later than 2 years after the effective
date of this Act and every 2 years thereafter, except as provided in
subsection (c)(2), the Board shall conduct a review, within the limits
of its existing resources available for reporting purposes of the
consumer credit card market including--
(1) the terms of credit card agreements and the practices
of credit card issuers;
(2) the effectiveness of disclosure of terms, fees, and
other expense of credit card plans;
(3) the adequacy of protections against unfair or deceptive
acts or practices relating to credit card plans, and
(4) whether or not, and to what extent, the Credit
Cardholders' Bill of Rights Act of 2009 has resulted in--
(A) higher annual percentage rates of interest, on
average, for credit card users than the average of such
rates of interest in effect before the effective date
of the Act;
(B) the imposition of annual fees or other credit
card fees--
(i) that did not exist before such
effective date;
(ii) at a higher average rate of
applicability than existed before such
effective date; or
(iii) with higher average costs to the
consumer than were in effect before such
effective date;
(C) an increase in the rate of denial of--
(i) new credit card accounts for consumers;
or
(ii) new extensions of credit, or
additional lines of credit, for existing credit
accounts established before such effective
date; or
(D) any other adverse or negative condition or
effect on consumers.
(b) Solicitation of Public Comment.--In connection with conducting
the review required by subsection (a), the Board shall solicit comment
from consumers, credit card issuers, and other interested parties, such
as through hearings or written comments.
(c) Regulations.--
(1) Notice.--Following the review required by subsection
(a) the Board shall publish a notice in the Federal Register
that--
(A) summarizes the review, the comments received
from the public solicitation, and other evidence
gathered by the Board such as through consumer testing
or other research; and
(B) either--
(i) proposes new or revised regulations or
interpretations to update or revise disclosures
and protections for consumer credit cards as
appropriate; or
(ii) states the reason for the Board's
determination that new or revised regulations
are not proposed.
(2) Revision of review period following material revision
of regulations.--In the event the Board materially revises
regulations on consumer credit card plans, a review need not be
conducted until 2 years following the effective date of the
revised regulations, which thereafter shall become the new date
for the biennial review required by subsection (a).
(d) Board Report to the Congress.--The Board shall report to the
Congress no less frequently than every 2 years, except as provided in
subsection (c)(2), on the status of its most recent review, its efforts
to address any issues identified from the review, and any
recommendations for legislation.
(e) Additional Reporting.--The Federal banking agencies and the
Federal Trade Commission shall provide annually to the Board, and the
Board shall include in its annual report to Congress under section 10
of the Federal Reserve Act, information about the supervisory and
enforcement activities of the agencies with respect to credit card
issuers' compliance with applicable Federal consumer protection
statutes and regulations including--
(1) this Act, the amendments made by this Act, and
regulations prescribed under this Act and such amendments; and
(2) section 5 of the Federal Trade Commission Act, and
regulations prescribed under the Federal Trade Commission Act,
such as part 227 of title 12 of the Code of Federal Regulations
as prescribed by the Board (Regulation AA).
SEC. 13. SOLICITATIONS REQUIRED TO INCLUDE WARNING ON ADVERSE EFFECTS
OF EXCESSIVE CREDIT INQUIRIES.
Section 127(c)(1)(B) of the Truth in Lending Act (15 U.S.C.
1637(c)(1)(B)) is amended by adding at the end the following new
clause:
``(iv) Excessive credit inquiries.--A
warning that excessive credit inquiries, which
occur in connection with credit applications
and solicitations and under other
circumstances, can have an adverse effect on a
consumer credit score.''.
SEC. 14. READABILITY REQUIREMENT.
Section 122 of the Truth in Lending Act (U.S.C. 1632) is amended by
adding at the end the following new subsection:
``(d) Minimum Type-Size and Font Requirement for Credit Card
Applications and Disclosures.--All written information, provisions, and
terms in or on any application, solicitation, contract, or agreement
for any credit card account under an open end consumer credit plan, and
all written information included in or on any disclosure required under
this chapter with respect to any such account, shall appear--
``(1) in not less than 12-point type; and
``(2) in any font other than a font which the Board has
designated, in regulations under this section, as a font that
inhibits readability.''.
SEC. 15. REPORT TO CONGRESS ON REDUCTIONS OF CONSUMER CREDIT CARD
LIMITS BASED ON CERTAIN INFORMATION AS TO EXPERIENCE OR
TRANSACTIONS OF THE CONSUMER.
(a) Report on Creditor Practices Required.--Before the end of the
6-month period beginning on the date of the enactment of this Act, the
Board of Governors of the Federal Reserve System, in consultation with
the Comptroller of the Currency, the Director of the Office of Thrift
Supervision, the Federal Deposit Insurance Corporation, the National
Credit Union Administration Board, and the Federal Trade Commission,
shall report to the Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing, and Urban
Affairs of the Senate on the extent to which, during the 3-year period
ending on such date of enactment, creditors have reduced credit limits
or raised interest rates applicable to credit card accounts under open
end consumer credit plans based on--
(1) the geographical location where a credit transaction
with the consumer takes place or the identity of the merchant
involved in the transaction;
(2) the consumer's credit transactions, including the type
of credit transaction, the type of items purchased in such
transaction, the price of items purchased in such transaction,
any change in the type or price of items purchased in such
transactions, and other data pertaining to the consumer's use
of such credit card account; and
(3) the identity of the mortgage creditor which extended or
holds the mortgage loan secured by the consumer's primary
residence.
(b) Other Information.--The report required under subsection (a)
shall also include--
(1) the number and identity of creditors that have engaged
in the practices described in subsection (a);
(2) the extent to which the practices described in
subsection (a) have an adverse impact on minority or low-income
consumers;
(3) any other relevant information regarding such
practices; and
(4) recommendations to the Congress on regulatory or
statutory changes that may be needed to restrict or prevent
such practices.
SEC. 16. PROCEDURE FOR TIMELY SETTLEMENTS OF DECEDENT OBLIGORS'
ESTATES.
(a) In General.--Chapter 2 of the Truth in Lending Act ( U.S.C.
1631 et seq.) is amended by adding at the end the following new
section:
``Sec. 140A Procedure for timely settlements of decedent obligors'
estates
``The Board, in consultation with the Federal Trade Commission and
each other agency referred to in section 108(a), shall prescribe
regulations to require any creditor, with respect to any credit card
account under an open end consumer credit plan, to establish procedures
to ensure that any administrator of an estate of any deceased obligor
with respect to such account can resolve outstanding credit balances in
a timely manner.''.
(b) Clerical Amendment.--The table of sections for chapter 2 of the
Truth in Lending Act is amended by inserting after the item relating to
section 140 the following new item:
``140A. Procedure for timely settlements of decedent obligors'
estates.''.
SEC. 17. INTERIM IMPLEMENTATION REPORTS TO THE CONGRESS.
The Chairman of the Board of Governors of the Federal Reserve
System shall submit a report each 90 days after the date of the
enactment of this Act on the level of implementation of the regulations
required to be prescribed under this Act to the Committee on Financial
Services of the House of Representatives and the Committee on Banking,
Housing, and Urban Affairs of the Senate until the Chairman can report
full industry implementation.
SEC. 18. DISCLOSURE REQUIREMENT FOR STORES ACCEPTING CREDIT CARD
ACCOUNT APPLICATIONS.
(a) In General.--Section 122 of the Truth in Lending Act (15 U.S.C.
1632) is amended by adding at the end the following:
``(d) Signs Required on Certain Premises Where Credit Card Account
Applications Accepted.--
``(1) In general.--A person who sells personal property to
consumers on a business premises and makes available to
consumers on such premises any application to open a credit
card account under an open end consumer credit plan, and where
such person is the issuer of such account, shall display in the
premises on a sign any information that is subject to
subsection (c) and that is required to be disclosed by the
person on that application.
``(2) Format.--Such information shall be displayed on the
sign in the form and manner which the Board shall prescribe by
regulations and which, to the extent practicable and
appropriate, shall be consistent with the form and manner
required for the disclosure of such information on the credit
card application.
``(3) Sign placement.--Such signs shall be conspicuously
placed at each location on the premises where the credit card
application may be submitted by the consumer.''.
(b) Conforming Amendment.--Section 111(e) of the Truth in Lending
Act (15 U.S.C. 1610(e)) is amended by adding at the end the following:
``Section 122(d) shall supersede State laws relating to store
display of the information that is subject to the requirements of such
section, except that any State may employ or establish State laws for
the purpose of enforcing the requirements of such section.''.
SEC. 19. EFFECTIVE DATE.
(a) In General.--Except as provided in subsection (c) for the
period described in such subsection, the amendments made by this Act
shall apply to all credit card accounts under open end consumer credit
plans after the earlier of--
(1) the end of the 12-month period beginning on the date of
the enactment of this Act; or
(2) June 30, 2010.
(b) Regulations.--Except as provided in subsection (c) for the
period described in such subsection, the Board of Governors of the
Federal Reserve System, in consultation with the Comptroller of the
Currency, the Director of the Office of Thrift Supervision, the Federal
Deposit Insurance Corporation, the National Credit Union Administration
Board, and the Federal Trade Commission, shall prescribe regulations,
in final form, implementing the amendments made by this Act before the
earlier of--
(1) the end of the 5-month period beginning on the date of
the enactment of this Act; or
(2) June 1, 2010.
(c) Interim Effective Period for Advance Notices of Rate
Increases.--
(1) In general.--During the period beginning 90 days after
the date of the enactment of this Act and ending on the
effective date of all the amendments under this Act as
determined pursuant to subsection (a), no increase in any
annual percentage rate of interest on any credit card account
under an open end consumer credit plan (as such terms are
defined in the Truth in Lending Act) may take effect unless the
creditor provides a written notice to the consumer at least 45
days before the increase would otherwise take effect which
fully describes the changes in the annual percentage rate, in a
complete and conspicuous manner, and the extent to which such
increase would apply to an existing balance.
(2) Exceptions.--A notice shall not be required under
paragraph (1) for an increase in an annual percentage rate
described in subparagraph (A), (B), or (C) of section
127B(b)(1) (as added by section 2).
(3) Regulations.--The Board of Governors of the Federal
Reserve System shall prescribe regulations implementing the
amendment referred to in paragraph (1), for purposes of this
subsection, before the end of the 60-day period beginning on
the date of the enactment of this Act.
Passed the House of Representatives April 30, 2009.
Attest:
Clerk.
111th CONGRESS
1st Session
H. R. 627
_______________________________________________________________________
AN ACT
To amend the Truth in Lending Act to establish fair and transparent
practices relating to the extension of credit under an open end
consumer credit plan, and for other purposes.