S 414 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
TITLE V--MISCELLANEOUS PROVISIONS
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.
Full Text of Legislation