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[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1052 Introduced in House (IH)]

107th CONGRESS
  1st Session
                                H. R. 1052

   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 15, 2001

Mr. LaFalce (for himself, Mrs. Maloney of New York, Mr. Gutierrez, Ms. 
   Lee, Mrs. Jones of Ohio, Mr. Capuano, Mr. Clay, Mr. Hinchey, Mr. 
Bonior, Mr. George Miller of California, Ms. DeLauro, Mr. Delahunt, and 
 Ms. Schakowsky) introduced the following bill; which was referred to 
                  the Committee on 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.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    (a) Short Title.--This Act may be cited as the ``Consumer Credit 
Card Protection Amendments of 2001''.
    (b) Reference.--Whenever in this Act an amendment or repeal is 
expressed in terms of an amendment to, or repeal of, a section or other 
provision, the reference shall be considered to be made to a section or 
other provision of the Consumer Credit Protection Act (15 U.S.C. 1601 
et seq.).

SEC. 2. DISCLOSURES REGARDING MINIMUM MONTHLY PAYMENTS.

    (a) In General.--Section 127(a)(3) of the Consumer Credit 
Protection Act (15 U.S.C. 1637(a)(3)) is amended by inserting before 
the period at the end the following: ``, or the method of determining 
the required minimum payment amount, if a minimum payment is required 
that is different from the amount of any finance charge, and the 
charges or penalties, if any, which may be imposed for failure by the 
obligor to pay the required finance charge or minimum payment amount''.
    (b) Repayment Information.--Section 127(b) (15 U.S.C. 1637(b)) is 
amended by adding at the end the following:
            ``(11) In a clear and conspicuous manner, repayment 
        information that would apply to the outstanding balance of the 
        consumer under the credit plan, including--
                    ``(A) the required minimum monthly payment on that 
                balance, represented as both a dollar figure and a 
                percentage of that balance;
                    ``(B) the number of months (rounded to the nearest 
                month) that it would take to pay the entire amount of 
                that current balance if the consumer pays only the 
                required minimum monthly payments and if no further 
                advances are made;
                    ``(C) the total cost to the consumer, including 
                interest and principal payments, of paying that balance 
                in full if the consumer pays only the required minimum 
                monthly payments and if no further advances are made; 
                and
                    ``(D) the following statement: `If your current 
                rate is a temporary introductory rate, your total costs 
                may be higher.'''.
    (c) Minimum Payment Amount.--Section 127(c)(1)(A) (15 U.S.C. 
1637(c)(1)(A)) is amended by adding at the end the following new 
clause:
                            ``(v) Minimum payment amount.--The method 
                        for determining the required minimum payment 
                        amount to be paid for each billing cycle, and 
                        the charge or penalty, if any, to be imposed 
                        for any failure by the obligor to pay the 
                        required minimum payment amount.''.

SEC. 3. INTERNET-BASED CREDIT CARD SOLICITATIONS.

    Section 127(c) (15 U.S.C. 1637(c)) is amended--
            (1) by redesignating paragraphs (3), (4), and (5) as 
        paragraphs (4), (5), and (6), respectively; and
            (2) by inserting after paragraph (2) the following new 
        paragraph:
            ``(3) Internet-based applications and solicitations.--
                    ``(A) In general.--In any Internet-based 
                solicitation to open a credit card account for any 
                person under an open end consumer credit plan, the 
                person making the solicitation shall clearly and 
                conspicuously disclose the following--
                            ``(i) the information described in 
                        subparagraphs (A) and (B) of paragraph (1); and
                            ``(ii) the disclosures in paragraph (6).
                    ``(B) Form of disclosure.--The disclosures required 
                by subparagraph (A) shall--
                            ``(i) be readily accessible to consumers in 
                        close proximity to the solicitation to open a 
                        credit card account; and
                            ``(ii) be updated regularly to reflect the 
                        current policies, terms, and fee amounts 
                        applicable to the credit card account.
                    ``(C) Definitions.--For purposes of this paragraph, 
                the following definitions shall apply:
                            ``(i) Internet.--The term `Internet' means 
                        the international computer network of both 
                        Federal and nonfederal interoperable packet 
                        switched data networks.
                            ``(ii) Interactive computer service.--The 
                        term `interactive computer service' means any 
                        information service, system, or access software 
                        provider that provides or enables computer 
                        access by multiple users to a computer server, 
                        including specifically a service or system that 
                        provides access to the Internet and such 
                        systems operated or services offered by 
                        libraries or educational institutions.''.

SEC. 4. DISCLOSURES RELATED TO ``TEASER RATES''.

    Section 127(c) (15 U.S.C. 1637(c)) is amended--
            (1) by redesignating paragraph (6) (as so redesignated by 
        section 3 of this Act) as paragraph (7); and
            (2) by inserting after paragraph (5) (as so redesignated by 
        section 3 of this Act) the following new paragraph:
            ``(6) Additional notice concerning `teaser rates'.--
                    ``(A) In general.--If any application or 
                solicitation for a credit card for which a disclosure 
                is required under this subsection offers, for an 
                introductory period of less than 1 year, an annual 
                percentage rate of interest which--
                            ``(i) is less than the annual percentage 
                        rate of interest which will apply after the end 
                        of such introductory period; or
                            ``(ii) in the case of an annual percentage 
                        rate which varies in accordance with an index, 
                        which is less than the current annual 
                        percentage rate under the index which will 
                        apply after the end of such period,
                the application or solicitation shall contain the 
                disclosure contained in subparagraph (B) or (C), as 
                appropriate.
                    ``(B) Fixed annual percentage rate.--If the annual 
                percentage rate which will apply after the end of the 
                introductory period will be a fixed rate, the 
                application or solicitation shall include the following 
                disclosure: `The annual percentage rate of interest 
                applicable during the introductory period is not the 
                annual percentage rate which will apply after the end 
                of the introductory period. The permanent annual 
                percentage rate will apply after [insert applicable 
                date] and will be [insert applicable percentage 
                rate].'.
                    ``(C) Variable annual percentage rate.--If the 
                annual percentage rate which will apply after the end 
                of the introductory period will vary in accordance with 
                an index, the application or solicitation shall include 
                the following disclosure: `The annual percentage rate 
                of interest applicable during the introductory period 
                is not the annual percentage rate which will apply 
                after the end of the introductory period. The permanent 
                annual percentage rate will be determined by an index 
                and will apply after (insert date). If the index which 
                will apply after such date were applied to your account 
                today, the annual percentage rate would be [insert 
                applicable percentage rate].'.
                    ``(D) Conditions for introductory rates.--If the 
                annual percentage rate of interest which will apply 
                during the introductory period described in 
                subparagraph (A) is revocable or otherwise conditioned 
                upon any action by the obligor, including any failure 
                by the obligor to pay the minimum payment amount or 
                finance charge or to make any payment by the stated 
                monthly payment due date, the application or 
                solicitation shall include the following disclosures:
                            ``(i) the conditions that the obligor must 
                        meet to retain the annual percentage rate of 
                        interest during the introductory period; and
                            ``(ii) the annual percentage rate of 
                        interest that will apply as a result of the 
                        failure of the obligor to meet such conditions.
                    ``(E) Form of disclosure.--The disclosures required 
                under this paragraph shall be made in a clear and 
                conspicuous manner in a form at least as prominent as 
                the disclosure of the annual percentage rate of 
interest which will apply during the introductory period.''.

SEC. 5. LIMIT ON INACTIVITY FEES.

    Section 127 (15 U.S.C. 1637) is amended by adding at the end the 
following new subsection:
    ``(h) Limit on Inactivity Fees.--In the case of any credit card 
account under an open-end consumer credit plan, a creditor may not 
impose a fee based on inactivity for the account during any period in 
which no advances have been made, if the obligor maintains any 
outstanding balance and is charged a finance charge applicable to such 
balance.''.

SEC. 6. ISSUANCE OF CREDIT CARDS TO UNDERAGE CONSUMERS.

    Section 127(c) (15 U.S.C. 1637(c)) is amended--
            (1) by redesignating paragraph (7) (as so redesignated by 
        section 4 of this Act) as paragraph (8); and
            (2) by inserting after paragraph (6) (as added by section 4 
        of this Act) the following new paragraph:
            ``(7) Applications from underage consumers.--
                    ``(A) Prohibition on issuance.--No credit card may 
                be issued to, or open end credit plan established on 
                behalf of, any consumer who has not attained the age of 
                21, except in response to a written request or 
                application to the card issuer that meets the 
                requirements of subparagraph (B).
                    ``(B) Application requirements.--An application to 
                open a credit card account by a consumer who has not 
                reached the age of 21 as of the date of submission of 
                the application shall require--
                            ``(i) the signature of the parent or 
                        guardian of the consumer indicating joint 
                        liability for debts incurred by the consumer in 
                        connection with the account before the consumer 
                        has reached the age of 21; or
                            ``(ii) submission by the consumer of 
                        financial information indicating an independent 
                        means of repaying any obligation arising from 
                        the proposed extension of credit in connection 
                        with the account.''.

SEC. 7. PENALTIES FOR ON-TIME PAYMENT PROHIBITED.

    Section 127 (15 U.S.C. 1637) is amended by inserting after 
subsection (h) (as added by section 5 of this Act) the following new 
subsection:
    ``(i) Penalties for On-Time Payment Prohibited.--
            ``(1) In general.--In the case of any credit card account 
        under an open-end consumer credit plan, no creditor may cancel 
        an account, impose a minimum finance charge for any period 
        (including any annual period), impose any fee in lieu of a 
        minimum finance charge, or impose any other charge or penalty 
        with regard to such account or credit extended under such 
        account solely on the basis that any credit extended has been 
        repaid in full before the end of any grace period applicable 
        with respect to the extension of credit.
            ``(2) Payment due dates.--For purposes of paragraph (1), a 
        creditor shall be deemed to have imposed a prohibited charge or 
        penalty on an account under an open end consumer credit plan if 
        the creditor regularly transmits to the obligor of such plan a 
        statement for a billing cycle in which credit has been extended 
        under such plan that includes a payment due date as required by 
        subsection (b)(9) of this section--
                    ``(A) that is different from and in advance of--
                            ``(i) the date by which payment must be 
                        made for any credit extended under such credit 
                        plan to avoid incurring a finance change that 
                        was disclosed to such obligor pursuant to 
                        subsection (c)(1)(A)(iii) of this section; or
                            ``(ii) the actual date by which payment 
                        would otherwise have to be made to avoid 
                        incurring a finance charge if calculated on the 
                        same basis as the date by which or the period 
                        within which any payment must be made to avoid 
                        incurring a finance charge that was disclosed 
                        to such obligor pursuant to subsection 
                        (c)(1)(A)(iii); and
                    ``(B) that has the purpose or effect of inducing 
                the obligor of such plan to transmit payment to the 
                creditor earlier than what otherwise would be required 
                to avoid incurring a finance charge.
            ``(3) Scope of application.--Paragraph (1) shall not be 
        construed as--
                    ``(A) prohibiting the imposition of any flat annual 
                fee which may be imposed on the consumer in advance of 
                any annual period to cover the cost of maintaining a 
credit card account during such annual period without regard to whether 
any credit is actually extended under such account during such period; 
or
                    ``(B) otherwise affecting the imposition of the 
                actual finance charge applicable with respect to any 
                credit extended under such account during such annual 
                period at the annual percentage rate disclosed to the 
                consumer in accordance with this title for the period 
                of time any such credit is outstanding.''.

SEC. 8. FREEZE ON INTEREST RATE TERMS AND FEES ON CANCELED CARDS.

    Section 127 (15 U.S.C. 1637) is amended by inserting after 
subsection (i) (as added by section 7 of this Act) the following new 
subsection:
    ``(j) Freeze on Interest Rate Terms and Fees on Canceled Cards.--
            ``(1) Advance notice of increase in interest rate 
        required.--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 due to the 
        expiration of any introductory percentage rate of interest or 
        due solely to a change in another rate of interest to which 
        such rate is indexed) applicable to any outstanding balance of 
        credit under such plan may take effect before the beginning of 
        the billing cycle which begins not less than 15 days after the 
        obligor receives notice of such increase.
            ``(2) Increase not effective for canceled accounts.--If an 
        obligor referred to in paragraph (1) cancels the credit card 
        account before the beginning of the billing cycle referred to 
        in such paragraph--
                    ``(A) an annual percentage rate of interest 
                applicable after the cancellation with respect to such 
                outstanding balance on such account as of the date of 
                cancellation may not exceed any annual percentage rate 
                of interest applicable with respect to such balance 
                under the terms and conditions in effect before the 
                increase referred to in paragraph (1); and
                    ``(B) the repayment of such outstanding balance 
                after the cancellation shall be subject to all other 
                terms and conditions applicable with respect to such 
                account before the increase referred to in such 
                paragraph.
            ``(3) Notice of right to cancel.--The notice referred to in 
        paragraph (1) with respect to an increase in any annual 
        percentage rate of interest shall be made in a clear and 
        conspicuous manner and shall contain a brief statement of the 
        right of the obligor--
                    ``(A) to cancel the account before the effective 
                date of the increase; and
                    ``(B) after such cancellation, to pay any balance 
                outstanding on such account at the time of cancellation 
                in accordance with the terms and conditions in effect 
                before the cancellation.''.

SEC. 9. DISCLOSURE OF INTEREST RATES AND FEES ON CREDIT ADVANCES 
              THROUGH THIRD-PARTY CHECKS.

    Section 127 (15 U.S.C. 1637) is amended by inserting after 
subsection (j) (as added by section 8 of this Act) the following new 
subsection:
    ``(k) Fees and Interest Rates on Credit Advances Through the Use of 
Third-Party Checks.--
            ``(1) In general.--In the case of any credit card account 
        under an open-end consumer credit plan, a creditor may not 
        provide the obligor with any negotiable or transferable 
        instrument for use in making an extension of credit to the 
        obligor for the purpose of making a transfer to a third party, 
unless the creditor has fully satisfied the notice requirements of 
paragraph (2) with respect to such instrument.
            ``(2) Notice requirements.--A creditor meets the notice 
        requirements of this paragraph with respect to an instrument 
        referred to in paragraph (1) if the creditor provides to an 
        obligor, at the same time any such instrument is provided, a 
        notice which prominently and specifically describes--
                    ``(A) the amount of any transaction fee which may 
                be imposed for making an extension of credit through 
                the use of such instrument, including the exact 
                percentage rate to be used in determining such amount 
                if the amount of the transaction fee is expressed as a 
                percentage of the amount of the credit extended; and
                    ``(B) any annual percentage rate of interest 
                applicable in determining the finance charge for any 
                such extension of credit, if different from the finance 
                charge applicable to other extensions of credit under 
                such account.''.

SEC. 10. PROHIBITION ON OVER-THE-LIMIT FEES FOR CREDITOR-APPROVED 
              TRANSACTIONS.

    Section 127 (15 U.S.C. 1637) is amended by inserting after 
subsection (k) (as added by section 9 of this Act) the following new 
subsection:
    ``(l) Limitation on Imposition of Over-the-Limit Fees.--In the case 
of any credit card account under an open-end consumer credit plan, a 
creditor may not impose any fees on the obligor for any extension of 
credit in excess of the amount of credit authorized to be extended with 
respect to such account if the extension of credit is made in 
connection with a credit transaction which the creditor approves in 
advance or at the time of the transaction.''.

SEC. 11. REQUIREMENTS RELATING TO LATE PAYMENT DEADLINES AND PENALTIES.

    Section 127 (15 U.S.C. 1637) is amended by inserting after 
subsection (l) (as added by section 10 of this Act) the following new 
subsection:
    ``(m) Requirements Relating to Late Payment Deadlines and 
Penalties.--
            ``(1) Late payment deadline and postmark date required to 
        be disclosed.--In the case of a credit card account under an 
        open-end credit plan under which a late fee or charge may be 
        imposed due to the failure of the obligor to make payment on or 
        before the due date for such payment, the periodic statement 
        required under subsection (b) with respect to such account 
        shall include, in a conspicuous location on the billing 
        statement, the following:
                    ``(A) The date the payment is due or, if different, 
                the date on which a late payment fee will be charged, 
                together with the amount of the fee or charge to be 
                imposed if payment is made after such date.
                    ``(B) The date by which the payment must be 
                postmarked, if paid by mail, in order to avoid the 
                imposition of a late payment fee with respect to such 
                payment.
                    ``(C) A statement that no late fee may be imposed 
                in connection with a payment made by mail which was 
                postmarked on or before such postmark date.
            ``(2) Disclosure of increase in interest rates for late 
        payments.--If 1 or more late payments under a credit card 
        account described in paragraph (1) may result in an increase in 
        the annual percentage rate applicable to any outstanding 
        balance on such account, the statement required under 
        subsection (b) with respect to such account shall include 
        conspicuous notice of such fact, together with the applicable 
        penalty annual percentage rate, in close proximity to the 
        disclosure required in paragraph (1) of the date payment is due 
        under such account.
            ``(3) Requirements relating to postmark date.--
                    ``(A) In general.--The date included in a periodic 
                statement pursuant to paragraph (1)(B) with regard to 
                the postmark on a payment shall allow, in accordance 
                with regulations prescribed by the Board under 
                subparagraph (B), a reasonable time for the consumer to 
                make the payment and a reasonable time for the delivery 
                of the payment by the date referred to in paragraph 
                (1).
                    ``(B) Board regulations.--The Board shall prescribe 
                guidelines for determining reasonable period for making 
                a payment and delivery of a payment for purposes of 
                subparagraph (A), after consultations with the 
                Postmaster General and representatives of consumer and 
                trade organizations.
            ``(4) Payment at local branches.--If the creditor, in the 
        case of a credit card account referred to in paragraph (1), is 
        a financial institution which maintains branches or offices at 
        which payments on any such account are accepted from the 
        obliger in person, the date on which the obliger makes a 
        payment on the account at such branch or office shall be 
        considered as the date on which the payment is made for 
        purposes of determining whether a late fee or charge may be 
        imposed due to the failure of the obligor to make payment on or 
        before the due date for such payment, to the extent such 
        payment is made before the close of business of the branch or 
        office on the business immediately preceding the due date for 
        such payment.''

SEC. 12. PROHIBITION ON TWO-CYCLE BILLING.

    Section 127 (15 U.S.C. 1637) is amended by inserting after 
subsection (m) (as added by section 11 of this Act) the following new 
subsection:
    ``(n) Prohibition on Two-Cycle Billing.--In the case of any credit 
card account under an open-end consumer credit plan, if the creditor 
provides, with regard to any new extension of credit under such 
account, a period during which such extension of credit may be repaid 
without incurring a finance charge for such extension of credit, no 
finance charge may subsequently be imposed for such  period with regard 
to any unpaid balance (as of the end of such period) for such extension 
of credit.''

SEC. 13. UNSOLICITED DUAL-PURPOSE CARDS.

    Section 132 (15 U.S.C. 1642) is amended--
            (1) by inserting ``(a) In General.--'' before ``No'' in the 
        first sentence; and
            (2) by adding at the end the following new subsection:
    ``(b) Certain Cards Included.--For purposes of this section, the 
term `credit card' includes any dual purpose or multifunction card, 
including a stored-value card, debit card, check card, check guarantee 
card, or purchase-price discount card, that is connected with an open 
end credit plan and can be used, either on issuance or upon later 
activation, to obtain credit directly or indirectly.''.

SEC. 14. CIVIL LIABILITY.

    Section 130(a) (15 U.S.C. 1640(a)) is amended in the undesignated 
paragraph following paragraph (4)--
            (1) by striking ``or'' after ``(9)'' in the second 
        sentence;
            (2) by inserting after ``(10)'' in the second sentence the 
        following: ``, or (11)''; and
            (3) by striking the third sentence.

SEC. 15. REGULATIONS.

    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 shall issue regulations in final form to implement the 
amendments made by this Act. The Board of Governors of the Federal 
Reserve System shall also issue such staff commentary or publish such 
model disclosure statements and forms as the Board considers necessary 
to carry out the intent of the amendments made by this Act, to 
implement any initiative to prevent the circumvention of the amendments 
made by this Act, and to facilitate compliance with the requirements in 
the amendments.
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