I

106TH CONGRESS

1ST SESSION H. R. 900

To amend the Truth in Lending Act to enhance consumer disclosures regarding credit card terms and charges, to restrict issuance of credit cards

to students, to expand protections in connection with unsolicited credit

cards and third-party checks and to protect consumers from unreasonable

practices that result in unnecessary credit costs or loss of credit, and

for other purposes.

IN THE HOUSE OF REPRESENTATIVES

MARCH 2, 1999

Mr. LAFALCE (for himself, Mr. FRANK of Massachusetts, Mrs. MALONEY of

New York, Mr. BENTSEN, Ms. LEE, Mr. INSLEE, Ms. SCHAKOWSKY, Mr.

GONZALEZ, Mrs. JONES of Ohio, Mr. CAPUANO, Mr. BROWN of California, Mr. OLVER, Mr. GREEN of Texas, Mr. HINCHEY, Mr. SHOWS, Mr.

BRADY of Pennsylvania, Mr. FALEOMAVAEGA, and Mrs. MINK of Hawaii)

introduced the following bill; which was referred to the Committee on

Banking and Financial Services

A BILL

To amend the Truth in Lending Act to enhance consumer

disclosures regarding credit card terms and charges, to

restrict issuance of credit cards to students, to expand

protections in connection with unsolicited credit cards

and third-party checks and to protect consumers from

unreasonable practices that result in unnecessary credit

costs or loss of credit, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. SHORT TITLE.

2 (a) SHORT TITLE.—This Act may be cited as the

3 ‘‘Consumer Credit Card Protection Amendments of

4 1999’’.

5 (b) REFERENCE.—Whenever in this Act an amend6 ment or repeal is expressed in terms of an amendment

7 to, or repeal of, a section or other provision, the reference

8 shall be considered to be made to a section or other provi9 sion of the Consumer Credit Protection Act (15 U.S.C.

10 1601 et seq.).

11 SEC. 2. DISCLOSURES REGARDING MINIMUM MONTHLY

12 PAYMENTS.

13 (a) IN GENERAL.—Section 127(a)(3) of the Con14 sumer Credit Protection Act (15 U.S.C. 1637(a)(3)) is

15 amended by inserting before the period at the end the fol16 lowing: ‘‘, or the method of determining the required mini17 mum payment amount, if a minimum payment is required

18 that is different from the amount of any finance charge,

19 and the charges or penalties, if any, which may be imposed

20 for failure by the obligor to pay the required finance

21 charge or minimum payment amount’’.

22 (b) REPAYMENT INFORMATION.—Section 127(b) (15

23 U.S.C. 1637(b)) is amended by adding at the end the fol24 lowing:

25 ‘‘(11) In a clear and conspicuous manner, re26 payment information that would apply to the out-
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1 standing balance of the consumer under the credit

2 plan, including—

3 ‘‘(A) the required minimum monthly pay4 ment on that balance, represented as both a

5 dollar figure and a percentage of that balance;

6 ‘‘(B) the number of months (rounded to

7 the nearest month) that it would take to pay

8 the entire amount of that current balance if the

9 consumer pays only the required minimum

10 monthly payments and if no further advances

11 are made;

12 ‘‘(C) the total cost to the consumer, includ13 ing interest and principal payments, of paying

14 that balance in full if the consumer pays only

15 the required minimum monthly payments and if

16 no further advances are made; and

17 ‘‘(D) the following statement: ‘If your cur18 rent rate is a temporary introductory rate, your

19 total costs may be higher.’ ’’.

20 (c) MINIMUM PAYMENT AMOUNT.—Section

21 127(c)(1)(A) (15 U.S.C. 1637(c)(1)(A)) is amended by

22 adding at the end the following new clause:

23 ‘‘(v) MINIMUM PAYMENT AMOUNT.—

24 The method for determining the required

25 minimum payment amount to be paid for
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1 each billing cycle, and the charge or pen2 alty, if any, to be imposed for any failure

3 by the obligor to pay the required mini4 mum payment amount.’’.

5 SEC. 3. DISCLOSURE OF LATE PAYMENT DEADLINES AND

6 PENALTIES.

7 Section 127(b) (15 U.S.C. 1637(b)) is amended by

8 inserting after paragraph (11) (as added by section 2 of

9 this Act) the following new paragraph:

10 ‘‘(12) Where a charge is to be imposed due to

11 the failure of the obligor to make payment on or be12 fore a required payment due date, the date that pay13 ment is due or, if different, the date on which a late

14 payment fee will be charged, shall be stated promi15 nently in a conspicuous location on the billing state16 ment, together with the amount of the charge to be

17 imposed if payment is made after such date.’’.

18 SEC. 4. WORLDWIDE WEB-BASED CREDIT CARD SOLICITA19 TIONS.

20 Section 127(c) (15 U.S.C. 1637(c)) is amended—

21 (1) by redesignating paragraphs (3), (4), and

22 (5) as paragraphs (4), (5), and (6), respectively; and

23 (2) by inserting after paragraph (2) the follow24 ing new paragraph:
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1 ‘‘(3) WORLDWIDE WEB-BASED APPLICATIONS

2 AND SOLICITATIONS.—

3 ‘‘(A) IN GENERAL.—In any worldwide web4 based solicitation to open a credit card account

5 for any person under an open end consumer

6 credit plan, the person making the solicitation

7 shall clearly and conspicuously disclose the

8 following—

9 ‘‘(i) the information described in sub10 paragraphs (A) and (B) of paragraph (1);

11 and

12 ‘‘(ii) the disclosures in paragraph (6)

13 of this subsection (as added by section 5 of

14 this Act).

15 ‘‘(B) FORM OF DISCLOSURE.—The disclo16 sures required by subparagraph (A) shall—

17 ‘‘(i) be readily accessible to consumers

18 in close proximity to the solicitation to

19 open a credit card account; and

20 ‘‘(ii) be updated regularly to reflect

21 the current policies, terms, and fee

22 amounts applicable to the credit card ac23 count.’’.

24 SEC. 5. DISCLOSURES RELATED TO ‘‘TEASER RATES’’.

25 Section 127(c) (15 U.S.C. 1637(c)) is amended—
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1 (1) by redesignating paragraph (6) (as so re2 designated by section 4 of this Act) as paragraph

3 (7); and

4 (2) by inserting after paragraph (5) (as so re5 designated by section 4 of this Act) the following

6 new paragraph:

7 ‘‘(6) ADDITIONAL NOTICE CONCERNING ‘TEAS8 ER RATES’.—

9 ‘‘(A) IN GENERAL.—If any application or

10 solicitation for a credit card for which a disclo11 sure is required under this subsection offers, for

12 an introductory period of less than 1 year, an

13 annual percentage rate of interest which—

14 ‘‘(i) is less than the annual percentage

15 rate of interest which will apply after the

16 end of such introductory period; or

17 ‘‘(ii) in the case of an annual percent18 age rate which varies in accordance with

19 an index, which is less than the current

20 annual percentage rate under the index

21 which will apply after the end of such pe22 riod,

23 the application or solicitation shall contain the

24 disclosure contained in subparagraph (B) or

25 (C), as appropriate.
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1 ‘‘(B) FIXED ANNUAL PERCENTAGE

2 RATE.—If the annual percentage rate which will

3 apply after the end of the introductory period

4 will be a fixed rate, the application or solicita5 tion shall include the following disclosure: ‘The

6 annual percentage rate of interest applicable

7 during the introductory period is not the annual

8 percentage rate which will apply after the end

9 of the introductory period. The permanent an10 nual percentage rate will apply after [insert ap11 plicable date] and will be [insert applicable per12 centage rate].’.

13 ‘‘(C) VARIABLE ANNUAL PERCENTAGE

14 RATE.—If the annual percentage rate which will

15 apply after the end of the introductory period

16 will vary in accordance with an index, the appli17 cation or solicitation shall include the following

18 disclosure: ‘The annual percentage rate of inter19 est applicable during the introductory period is

20 not the annual percentage rate which will apply

21 after the end of the introductory period. The

22 permanent annual percentage rate will be deter23 mined by an index and will apply after (insert

24 date). If the index which will apply after such

25 date were applied to your account today, the
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1 annual percentage rate would be [insert applica2 ble percentage rate].’.

3 ‘‘(D) CONDITIONS FOR INTRODUCTORY

4 RATES.—If the annual percentage rate of inter5 est which will apply during the introductory pe6 riod described in subparagraph (A) is revocable

7 or otherwise conditioned upon any action by the

8 obligor, including any failure by the obligor to

9 pay the minimum payment amount or finance

10 charge or to make any payment by the stated

11 monthly payment due date, the application or

12 solicitation shall include the following disclo13 sures:

14 ‘‘(i) the conditions that the obligor

15 must meet to retain the annual percentage

16 rate of interest during the introductory pe17 riod; and

18 ‘‘(ii) the annual percentage rate of in19 terest that will apply as a result of the fail20 ure of the obligor to meet such conditions.

21 ‘‘(E) FORM OF DISCLOSURE.—The disclo22 sures required under this paragraph shall be

23 made in a clear and conspicuous manner in a

24 form at least as prominent as the disclosure of
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1 the annual percentage rate of interest which

2 will apply during the introductory period.’’.

3 SEC. 6. LIMIT ON INACTIVITY FEES.

4 Section 127 (15 U.S.C. 1637) is amended by adding

5 at the end the following new subsection:

6 ‘‘(h) LIMIT ON INACTIVITY FEES.—In the case of any

7 credit card account under an open-end consumer credit

8 plan, a creditor may not impose a fee based on inactivity

9 for the account during any period in which no advances

10 have been made, if the obligor maintains any outstanding

11 balance and is charged a finance charge applicable to such

12 balance.’’.

13 SEC. 7. ISSUANCE OF CREDIT CARDS TO UNDERAGE CON14 SUMERS.

15 Section 127(c) (15 U.S.C. 1637(c)) is amended—

16 (1) by redesignating paragraph (7) (as so re17 designated by section 5 of this Act) as paragraph

18 (8); and

19 (2) by inserting after paragraph (6) (as added

20 by section 5 of this Act) the following new para21 graph:

22 ‘‘(7) APPLICATIONS FROM UNDERAGE CONSUM23 ERS.—

24 ‘‘(A) PROHIBITION ON ISSUANCE.—No

25 credit card may be issued to, or open end credit
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1 plan established on behalf of, any consumer

2 who has not attained the age of 21, except in

3 response to a written request or application to

4 the card issuer that meets the requirements of

5 subparagraph (B).

6 ‘‘(B) APPLICATION REQUIREMENTS.—An

7 application to open a credit card account by a

8 consumer who has not reached the age of 21 as

9 of the date of submission of the application

10 shall require—

11 ‘‘(i) the signature of the parent or

12 guardian of the consumer indicating joint

13 liability for debts incurred by the consumer

14 in connection with the account before the

15 consumer has reached the age of 21; or

16 ‘‘(ii) submission by the consumer of

17 financial information indicating an inde18 pendent means of repaying any obligation

19 arising from the proposed extension of

20 credit in connection with the account.’’.

21 SEC. 8. PENALTIES FOR ON-TIME PAYMENT PROHIBITED.

22 Section 127 (15 U.S.C. 1637) is amended by insert23 ing after subsection (h) (as added by section 6 of this Act)

24 the following new subsection:
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1 ‘‘(i) PENALTIES FOR ON-TIME PAYMENT PROHIB2 ITED.—

3 ‘‘(1) IN GENERAL.—In the case of any credit

4 card account under an open-end consumer credit

5 plan, no creditor may cancel an account, impose a

6 minimum finance charge for any period (including

7 any annual period), impose any fee in lieu of a mini8 mum finance charge, or impose any other charge or

9 penalty with regard to such account or credit ex10 tended under such account solely on the basis that

11 any credit extended has been repaid in full before

12 the end of any grace period applicable with respect

13 to the extension of credit.

14 ‘‘(2) PAYMENT DUE DATES.—For purposes of

15 paragraph (1), a creditor shall be deemed to have

16 imposed a prohibited charge or penalty on an ac17 count under an open end consumer credit plan if the

18 creditor regularly transmits to the obligor of such

19 plan a statement for a billing cycle in which credit

20 has been extended under such plan that includes a

21 payment due date as required by subsection (b)(9)

22 of this section—

23 ‘‘(A) that is different from and in advance

24 of—
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1 ‘‘(i) the date by which payment must

2 be made for any credit extended under

3 such credit plan to avoid incurring a fi4 nance change that was disclosed to such

5 obligor pursuant to subsection

6 (c)(1)(A)(iii) of this section; or

7 ‘‘(ii) the actual date by which pay8 ment would otherwise have to be made to

9 avoid incurring a finance charge if cal10 culated on the same basis as the date by

11 which or the period within which any pay12 ment must be made to avoid incurring a fi13 nance charge that was disclosed to such

14 obligor pursuant to subsection

15 (c)(1)(A)(iii); and

16 ‘‘(B) that has the purpose or effect of in17 ducing the obligor of such plan to transmit pay18 ment to the creditor earlier than what otherwise

19 would be required to avoid incurring a finance

20 charge.

21 ‘‘(3) SCOPE OF APPLICATION.—Paragraph (1)

22 shall not be construed as—

23 ‘‘(A) prohibiting the imposition of any flat

24 annual fee which may be imposed on the con25 sumer in advance of any annual period to cover
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1 the cost of maintaining a credit card account

2 during such annual period without regard to

3 whether any credit is actually extended under

4 such account during such period; or

5 ‘‘(B) otherwise affecting the imposition of

6 the actual finance charge applicable with re7 spect to any credit extended under such account

8 during such annual period at the annual per9 centage rate disclosed to the consumer in ac10 cordance with this title for the period of time

11 any such credit is outstanding.’’.

12 SEC. 9. FREEZE ON INTEREST RATE TERMS AND FEES ON

13 CANCELED CARDS.

14 Section 127 (15 U.S.C. 1637) is amended by insert15 ing after subsection (i) (as added by section 8 of this Act)

16 the following new subsection:

17 ‘‘(j) FREEZE ON INTEREST RATE TERMS AND FEES

18 ON CANCELED CARDS.—

19 ‘‘(1) ADVANCE NOTICE OF INCREASE IN INTER20 EST RATE REQUIRED.—In the case of any credit

21 card account under an open-end consumer credit

22 plan, no increase in any annual percentage rate of

23 interest (other than an increase due to the expira24 tion of any introductory percentage rate of interest

25 or due solely to a change in another rate of interest
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1 to which such rate is indexed) applicable to any out2 standing balance of credit under such plan may take

3 effect before the beginning of the billing cycle which

4 begins not less than 15 days after the obligor re5 ceives notice of such increase.

6 ‘‘(2) INCREASE NOT EFFECTIVE FOR CANCELED

7 ACCOUNTS.—If an obligor referred to in paragraph

8 (1) cancels the credit card account before the begin9 ning of the billing cycle referred to in such

10 paragraph—

11 ‘‘(A) an annual percentage rate of interest

12 applicable after the cancellation with respect to

13 such outstanding balance on such account as of

14 the date of cancellation may not exceed any an15 nual percentage rate of interest applicable with

16 respect to such balance under the terms and

17 conditions in effect before the increase referred

18 to in paragraph (1); and

19 ‘‘(B) the repayment of such outstanding

20 balance after the cancellation shall be subject to

21 all other terms and conditions applicable with

22 respect to such account before the increase re23 ferred to in such paragraph.

24 ‘‘(3) NOTICE OF RIGHT TO CANCEL.—The no25 tice referred to in paragraph (1) with respect to an
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1 increase in any annual percentage rate of interest

2 shall be made in a clear and conspicuous manner

3 and shall contain a brief statement of the right of

4 the obligor—

5 ‘‘(A) to cancel the account before the effec6 tive date of the increase; and

7 ‘‘(B) after such cancellation, to pay any

8 balance outstanding on such account at the

9 time of cancellation in accordance with the

10 terms and conditions in effect before the can11 cellation.’’.

12 SEC. 10. DISCLOSURE OF INTEREST RATES AND FEES ON

13 CREDIT ADVANCES THROUGH THIRD-PARTY

14 CHECKS.

15 Section 127 (15 U.S.C. 1637) is amended by insert16 ing after subsection (j) (as added by section 9 of this Act)

17 the following new subsection:

18 ‘‘(k) FEES AND INTEREST RATES ON CREDIT AD19 VANCES THROUGH THE USE OF THIRD-PARTY

20 CHECKS.—

21 ‘‘(1) IN GENERAL.—In the case of any credit

22 card account under an open-end consumer credit

23 plan, a creditor may not provide the obligor with any

24 negotiable or transferable instrument for use in

25 making an extension of credit to the obligor for the
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1 purpose of making a transfer to a third party, unless

2 the creditor has fully satisfied the notice require3 ments of paragraph (2) with respect to such instru4 ment.

5 ‘‘(2) NOTICE REQUIREMENTS.—A creditor

6 meets the notice requirements of this paragraph

7 with respect to an instrument referred to in para8 graph (1) if the creditor provides to an obligor, at

9 the same time any such instrument is provided, a

10 notice which prominently and specifically describes—

11 ‘‘(A) the amount of any transaction fee

12 which may be imposed for making an extension

13 of credit through the use of such instrument,

14 including the exact percentage rate to be used

15 in determining such amount if the amount of

16 the transaction fee is expressed as a percentage

17 of the amount of the credit extended; and

18 ‘‘(B) any annual percentage rate of inter19 est applicable in determining the finance charge

20 for any such extension of credit, if different

21 from the finance charge applicable to other ex22 tensions of credit under such account.’’.
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1 SEC. 11. PROHIBITION ON OVER-THE-LIMIT FEES FOR

2 CREDITOR-APPROVED TRANSACTIONS.

3 Section 127 (15 U.S.C. 1637) is amended by insert4 ing after subsection (k) (as added by section 10 of this

5 Act) the following new subsection:

6 ‘‘(l) LIMITATION ON IMPOSITION OF OVER-THE7 LIMIT FEES.—In the case of any credit card account

8 under an open-end consumer credit plan, a creditor may

9 not impose any fees on the obligor for any extension of

10 credit in excess of the amount of credit authorized to be

11 extended with respect to such account if the extension of

12 credit is made in connection with a credit transaction

13 which the creditor approves in advance or at the time of

14 the transaction.’’.

15 SEC. 12. UNSOLICITED DUAL-PURPOSE CARDS.

16 Section 132 (15 U.S.C. 1642) is amended—

17 (1) by inserting ‘‘(a) IN GENERAL.—’’ before

18 ‘‘No’’ in the first sentence; and

19 (2) by adding at the end the following new sub20 section:

21 ‘‘(b) CERTAIN CARDS INCLUDED.—For purposes of

22 this section, the term ‘credit card’ includes any dual pur23 pose or multifunction card, including a stored-value card,

24 debit card, check card, check guarantee card, or purchase25 price discount card, that is connected with an open end
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1 credit plan and can be used, either on issuance or upon

2 later activation, to obtain credit directly or indirectly.’’.

3 SEC. 13. CIVIL LIABILITY.

4 Section 130(a) (15 U.S.C. 1640(a)) is amended in

5 the undesignated paragraph following paragraph (4)—

6 (1) by striking ‘‘or’’ after ‘‘(9)’’ in the second

7 sentence;

8 (2) by inserting after ‘‘(10)’’ in the second sen9 tence the following: ‘‘, (11) or (12)’’; and

10 (3) by striking the third sentence.

11 SEC. 14. REGULATIONS.

12 Before the end of the 6-month period beginning on

13 the date of the enactment of this Act, the Board of Gov14 ernors of the Federal Reserve System shall issue regula15 tions in final form to implement the amendments made

16 by this Act. The Board of Governors of the Federal Re17 serve System shall also issue such staff commentary or

18 publish such model disclosure statements and forms as the

19 Board considers necessary to carry out the intent of the

20 amendments made by this Act, to implement any initiative

21 to prevent the circumvention of the amendments made by

22 this Act, and to facilitate compliance with the require23 ments in the amendments.

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