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[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 627 Reported in House (RH)]

                                                  Union Calendar No. 41
111th CONGRESS
  1st Session
                                H. R. 627

                          [Report No. 111-88]

  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.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                            January 22, 2009

 Mrs. Maloney (for herself, Mr. Frank of Massachusetts, Mr. Jones, Mr. 
 Kanjorski, Ms. Waters, Mr. Gutierrez, Mr. Ackerman, Mr. Capuano, Mr. 
  Ellison, Mr. Davis of Tennessee, Mr. Cleaver, Mr. George Miller of 
  California, Mr. Obey, Mr. DeFazio, Mr. Hinojosa, Mr. McGovern, Mr. 
Yarmuth, Mr. Olver, Ms. Edwards of Maryland, Mr. Courtney, Ms. DeLauro, 
 Mr. Kennedy, Mrs. Lowey, Mr. Brady of Pennsylvania, Mr. Chandler, Mr. 
    Loebsack, Mr. Pascrell, Mr. Bishop of New York, Mr. Filner, Mr. 
 Carnahan, Mr. Weiner, Mr. Markey of Massachusetts, Mr. Grijalva, Mr. 
    Cummings, Ms. Schakowsky, Mr. Gene Green of Texas, Mr. Moran of 
Virginia, Ms. Sutton, Mr. Hinchey, Ms. Bordallo, Ms. Lee of California, 
 Mr. Welch, and Mr. Higgins) introduced the following bill; which was 
            referred to the Committee on Financial Services

                             April 27, 2009

 Additional sponsors: Mr. Lynch, Ms. Woolsey, Mr. Sherman, Ms. Matsui, 
 Mr. Rahall, Mr. Doggett, Mr. Nye, Ms. Zoe Lofgren of California, Mr. 
   Stupak, Mr. Berman, Mr. Inslee, Mr. Gonzalez, Ms. Eshoo, Ms. Shea-
Porter, Ms. Tsongas, Mr. Visclosky, Mr. Wu, Ms. Clarke, Ms. Hirono, Mr. 
Cohen, Mr. Schauer, Ms. Norton, Mr. Lipinski, Mr. Maffei, Mr. Kratovil, 
  Ms. Pingree of Maine, Mr. Delahunt, Mr. Blumenauer, Mr. Arcuri, Mr. 
Langevin, Mr. Hall of New York, Mr. Davis of Illinois, Mr. Abercrombie, 
Mr. Jackson of Illinois, Mr. Schiff, Mr. Miller of North Carolina, Mr. 
  Taylor, Mr. Braley of Iowa, Mr. Bishop of Georgia, Mr. Waxman, Mr. 
 Baca, Mr. Honda, Mr. Serrano, Mrs. Davis of California, Mr. Watt, Mr. 
Levin, Mr. Stark, Mr. Van Hollen, Mr. Lewis of Georgia, Ms. Harman, Mr. 
Hastings of Florida, Mr. Al Green of Texas, Mr. Johnson of Georgia, Ms. 
 Castor of Florida, Ms. Kilroy, Mr. Massa, Mr. Lujan, Mr. Kissell, Mr. 
 Boswell, Mrs. Dahlkemper, Mr. Patrick J. Murphy of Pennsylvania, Ms. 
 Markey of Colorado, Mr. Walz, Ms. Giffords, Mr. Pierluisi, Mr. Tonko, 
  Mr. Quigley, Mr. Larson of Connecticut, Mr. Nadler of New York, Mr. 
      Barrow, Mr. Connolly of Virginia, Ms. Fudge, and Mr. Teague

                             April 27, 2009

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]
[For text of introduced bill, see copy of bill as introduced on January 
                               22, 2009]

_______________________________________________________________________

                                 A BILL

 
  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 14th 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.
    ``(d) 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 Before 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 Before Notice of New Account Is 
Provided to Consumer Reporting Agency.--
            ``(1) In general.--A creditor may not furnish any 
        information 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 
        until the credit card has been used or activated by the 
        consumer.
            ``(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 applied using 1 of the following 
        methods:
                    ``(A) High-to-low method.--The excess amount is 
                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.
                    ``(B) Pro rata method.--The excess amount is 
                allocated among each of the portions of such balance 
                which bear different rates of interest in the same 
                proportion as each such portion of the outstanding 
                balance bears to the total outstanding balance.
            ``(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.''.

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-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, with respect to such account, from completing any 
        transaction involving the extension of credit, with respect to 
        such account, in excess of the amount of credit authorized 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 creditor receives notice from the consumer in 
        accordance with paragraph (2) and shall remain effective until 
        the consumer revokes the election.
            ``(4) Notification system.--
                    ``(A) In general.--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 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).
                    ``(B) Small issuers.--Notwithstanding subparagraph 
                (A), any credit card issuer which issues fewer than 
                50,000 credit cards in conjunction with credit card 
                accounts under open end consumer credit plans shall 
                establish and maintain a notification system, which 
                shall include a toll-free telephone number, Internet 
                address, or 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 notice--
                    ``(A) on the periodic statement required under 
                section 127(b) with respect to such account at least 
                once each calendar year; and
                    ``(B) on 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.
            ``(7) 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 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.
    ``(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 paragraph:
            ``(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.
                    ``(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.''.

SEC. 8. PROHIBIT FEES FOR PAYMENT ON CREDIT CARD ACCOUNTS BY ELECTRONIC 
              FUND TRANSFERS.

    (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 new subsection:
    ``(i) Payments by EFT.--In the case of a credit card account under 
an open end consumer credit plan, a creditor may not impose a fee based 
on the manner in which payment on the account is made, including a fee 
for making any such payment by electronic fund transfer (as defined in 
section 903).''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to all payments made after the date of the enactment of this Act 
and any fee imposed after such date in contravention of the amendment 
shall be promptly credited to the consumer's account.

SEC. 9. 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. 10. 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.
                                                  Union Calendar No. 41

111th CONGRESS

  1st Session

                               H. R. 627

                          [Report No. 111-88]

_______________________________________________________________________

                                 A BILL

  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.

_______________________________________________________________________

                             April 27, 2009

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed
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