I 

110TH CONGRESS 

1ST SESSION H. R. 1461 

To amend the Consumer Credit Protection Act to ban abusive credit practices, 

enhance consumer disclosures, protect underage consumers, and for other 

purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 9, 2007 

Mr. UDALL of Colorado (for himself and Mr. CLEAVER) introduced the 

following bill; which was referred to the Committee on Financial Services 

A BILL 

To amend the Consumer Credit Protection Act to ban abusive credit practices, enhance consumer disclosures, protect underage consumers, 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, 

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

4 This Act may be cited as the ‘‘Credit Card Account5 ability Responsibility and Disclosure Act of 2007’’ or the 

6 ‘‘Credit CARD Act of 2007’’. 

7 SEC. 2. REGULATORY AUTHORITY. 

8 The Board of Governors of the Federal Reserve Sys9 tem may issue such rules or publish such model forms as 


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1 it considers necessary to carry out this Act and the 

2 amendments made by this Act, in accordance with sections 

3 105 and 122 of the Truth in Lending Act. 

4 TITLE I—REGULATIONS RE5 GARDING CERTAIN RATES 

6 AND FEES 

7 SEC. 101. PRIOR NOTICE OF RATE INCREASES REQUIRED. 

8 Section 127 of the Truth in Lending Act (15 U.S.C. 

9 1637) is amended by adding at the end the following: 

10 ‘‘(i) ADVANCE NOTICE OF INCREASE IN INTEREST

11 RATE REQUIRED.— 

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

13 card account under an open end consumer credit 

14 plan, no increase in any annual percentage rate of 

15 interest (other than an increase due to the expira16 tion of any introductory percentage rate of interest, 

17 or due solely to a change in another rate of interest 

18 to which such rate is indexed)— 

19 ‘‘(A) may take effect before the beginning 

20 of the billing cycle which begins not less than 

21 15 days after the obligor receives notice of such 

22 increase; or 

23 ‘‘(B) may apply to any outstanding balance 

24 of credit under such plan as of the date of the 


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1 notice of the increase required under paragraph 

2 (1). 

3 ‘‘(2) NOTICE OF RIGHT TO CANCEL.—The no4 tice referred to in paragraph (1) with respect to an 

5 increase in any annual percentage rate of interest 

6 shall be made in a clear and conspicuous manner 

7 and shall contain a brief statement of the right of 

8 the obligor to cancel the account before the effective 

9 date of the increase.’’. 

10 SEC. 102. FREEZE ON INTEREST RATE TERMS AND FEES ON 

11 CANCELED CARDS. 

12 Section 127 of the Truth in Lending Act (15 U.S.C. 

13 1637) is amended by inserting after subsection (i) (as 

14 added by section 101 of this title) the following new sub15 section: 

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

17 ON CANCELED CARDS.—If an obligor referred to in sub18 section (i) closes or cancels a credit card account before 

19 the beginning of the billing cycle referred to in subsection 

20 (h)(1)— 

21 ‘‘(1) an annual percentage rate of interest ap22 plicable after the cancellation with respect to the 

23 outstanding balance on the account as of the date of 

24 cancellation may not exceed any annual percentage 

25 rate of interest applicable with respect to such balVerDate Aug 31 2005 17:45 Mar 11, 2007 Jkt 059200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H1461.IH H1461

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1 ance under the terms and conditions in effect before 

2 the date of the notice of any increase referred to in 

3 subsection (i)(1); and 

4 ‘‘(2) the repayment of the outstanding balance 

5 after the cancellation shall be subject to all other 

6 terms and conditions applicable with respect to such 

7 account before the date of the notice of the increase 

8 referred to in subsection (i).’’. 

9 SEC. 103. LIMITS ON CHARGES OR FEES FOR TIMELY PAY10 MENTS OR NON-USE. 

11 Section 127 of the Truth in Lending Act (15 U.S.C. 

12 1637) is amended by inserting after subsection (j) (as 

13 added by section 102 of this title) the following new sub14 section: 

15 ‘‘(k) LIMITS ON CHARGES OR FEES FOR TIMELY

16 PAYMENTS OR NON-USE.— 

17 ‘‘(1) PROHIBITION ON CHARGES FOR ON-TIME

18 PAYMENTS.—In the case of any credit card account 

19 under an open end credit plan, where no other bal20 ance is owing on the account, no finance or interest 

21 charge or other charge may be imposed with regard 

22 to any amount of a new extension of credit that was 

23 paid on or before the date on which it was due. 

24 ‘‘(2) PROHIBITION ON CANCELLATION OR ADDI25 TIONAL FEES FOR ON-TIME PAYMENTS OR PAYMENT


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1 IN FULL.—In the case of any credit card account 

2 under an open end consumer credit plan, no fee or 

3 other penalty may be imposed on the consumer in 

4 connection with the payment in full of an existing 

5 account balance, or payment of more than the min6 imum required payment of an existing account bal7 ance. 

8 ‘‘(3) PROHIBITION ON FEES FOR NON-USE OF

9 CREDIT CARDS.—In the case of any credit card ac10 count under an open end consumer credit plan, no 

11 fee or other penalty may be imposed on the con12 sumer solely by reason of the consumer’s non-use of 

13 the card for a purchase or advance during any pe14 riod.’’. 

15 SEC. 104. PROHIBITION ON OVER-THE-LIMIT FEES FOR 

16 CREDITOR-APPROVED TRANSACTIONS. 

17 Section 127 of the Truth in Lending Act (15 U.S.C. 

18 1637) is amended by inserting after subsection (k) (as 

19 added by section 103 of this title) the following new sub20 section: 

21 ‘‘(l) LIMITATION ON IMPOSITION OF OVER-THE22 LIMIT FEES.—In the case of any credit card account 

23 under an open end consumer credit plan, a creditor may 

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

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


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1 extended with respect to such account, if the extension of 

2 credit is made in connection with a credit transaction 

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

4 the transaction.’’. 

5 SEC. 105. PROHIBITION ON UNIVERSAL DEFAULTS. 

6 Chapter 4 of the Truth in Lending Act (15 U.S.C. 

7 1666 et seq.) is amended— 

8 (1) by redesignating section 171 as section 173; 

9 and 

10 (2) by adding at the end the following: 

11 ‘‘§ 171. Universal defaults prohibited 

12 ‘‘(a) IN GENERAL.—No credit card issuer may use 

13 any adverse information unrelated to a cardholder’s ac14 count with that issuer, including any information con15 tained in any consumer report (as defined in section 603) 

16 or any change in the credit score of the cardholder, as 

17 the basis for increasing any annual percentage rate of in18 terest applicable to a credit card account of the cardholder 

19 under an open end consumer credit plan, or to remove or 

20 increase any introductory annual percentage rate of inter21 est applicable to such account. 

22 ‘‘(b) EXCEPTION.—The limitation under subsection 

23 (a) shall not apply to— 

24 ‘‘(1) a credit card issuer that increases an an25 nual percentage rate of interest in accordance with 


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1 a credit card agreement that provides for rate 

2 changes according to changes in an index or for3 mula; or 

4 ‘‘(2) the removal or increase in an introductory 

5 annual percentage rate of interest applicable to the 

6 usage or payment of such account because of actions 

7 or omissions of a consumer that are directly related 

8 to such account. 

9 ‘‘(c) NOTICE TO CONSUMER.—The limitation under 

10 subsection (a) on the use of adverse information by a cred11 it card issuer shall be clearly and conspicuously described 

12 to the consumer by the credit card issuer in any disclosure 

13 or statement required under subsection (a) or (b) of sec14 tion 127.’’. 

15 TITLE II—ENHANCED 

16 CONSUMER DISCLOSURES 

17 SEC. 201. PAYOFF TIMING DISCLOSURES. 

18 (a) IN GENERAL.—Section 127(b) of the Truth in 

19 Lending Act (15 U.S.C. 1637(b)) is amended by adding 

20 at the end the following new paragraph: 

21 ‘‘(13) REPAYMENT INFORMATION.— 

22 ‘‘(A) IN GENERAL.—Repayment informa23 tion that would apply to the outstanding bal24 ance of the consumer under the credit plan, in25 cluding— 


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1 ‘‘(i) the outstanding balance in the ac2 count at the beginning of the statement 

3 period, as required by paragraph (1) of 

4 this subsection; 

5 ‘‘(ii) the required minimum monthly 

6 payment on that balance, represented as 

7 both a dollar figure and as a percentage of 

8 that balance, as well as the portion of such 

9 payment that represents repayment of a 

10 balance and what if any portions represent 

11 interest charges and other charges or fees; 

12 ‘‘(iii) the grace period within which 

13 payment must be made to avoid additional 

14 charges, as required by paragraph (9) of 

15 this subsection; and 

16 ‘‘(iv) the monthly payments amount 

17 that would be required for the consumer to 

18 eliminate the outstanding balance in 36 

19 months if no further purchases or ad20 vances are made. 

21 ‘‘(B) APPLICABLE ANNUAL PERCENTAGE

22 RATE.— 

23 ‘‘(i) IN GENERAL.—Subject to clause 

24 (ii), in making the disclosures under sub25 paragraph (A), the creditor shall apply the 


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1 annual percentage rate in effect on the 

2 date on which the disclosure is made until 

3 the date on which the balance would be 

4 paid in full. 

5 ‘‘(ii) EXCEPTION.—If the annual per6 centage rate in effect on the date on which 

7 the disclosure is made is a temporary rate 

8 that will change under a contractual provi9 sion applying an index or formula for sub10 sequent interest rate adjustment, the cred11 itor shall apply the rate in effect on the 

12 date on which the disclosure is made for as 

13 long as that rate will apply under that con14 tractual provision, and then apply an an15 nual percentage rate based on the index or 

16 formula in effect on the applicable billing 

17 date.’’. 

18 (b) TABULAR FORMAT REQUIRED FOR DISCLO19 SURES.—Section 122 of the Truth in Lending Act (15 

20 U.S.C. 1632) by adding at the end the following new sub21 section: 

22 ‘‘(d) FORMAT REQUIRED FOR CERTAIN DISCLO23 SURES UNDER SECTION 127(b)(13).— 


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1 ‘‘(1) FORM OF DISCLOSURE.—All of the infor2 mation disclosed pursuant to section 127(b)(13)(A) 

3 shall— 

4 ‘‘(A) be disclosed in the form and manner 

5 which the Board shall prescribe by regulations 

6 under this section and in accordance with sec7 tion 105; and 

8 ‘‘(B) be placed in a conspicuous and 

9 prominent location on the billing statement in 

10 typeface that is at least as large as the largest 

11 type on the statement, but in no instance less 

12 than 12-point in size. 

13 ‘‘(2) TABULAR FORMAT.—In the regulations 

14 prescribed under paragraph (1), the Board shall re15 quire that the disclosure of such information shall be 

16 in the form of a table that— 

17 ‘‘(A) contains clear and concise headings 

18 for each item of such information; and 

19 ‘‘(B) provides a clear and concise form 

20 stating each item of information required to be 

21 disclosed under each such heading. 

22 ‘‘(3) REQUIREMENTS REGARDING LOCATION

23 AND ORDER OF TABLE.—In prescribing the form of 

24 the table under paragraph (2), the Board shall re25 quire that— 


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1 ‘‘(A) all of the information in the table, 

2 and not just a reference to the table, be placed 

3 on the billing statement, as required by this 

4 subparagraph; and 

5 ‘‘(B) the items required to be included in 

6 the table shall be listed in the order in which 

7 such items are set forth in section 

8 127(b)(13)(A). 

9 ‘‘(4) BOARD DISCRETION IN PRESCRIBING

10 ORDER AND WORDING OF TABLE.—In prescribing 

11 the form of the table under subparagraph (C), the 

12 Board may employ terminology which is different 

13 than the terminology which is employed in subpara14 graph (A), if such terminology is easily understood 

15 and conveys substantially the same meaning.’’. 

16 (c) CIVIL LIABILITY.—Section 130(a) of the Truth 

17 in Lending Act (15 U.S.C. 1640(a)) is amended, in the 

18 undesignated paragraph following paragraph (4), by strik19 ing the second sentence and inserting the following: ‘‘In 

20 connection with the disclosures referred to in subsections 

21 (a) and (b) of section 127, a creditor shall have a liability 

22 determined under paragraph (2) only for failing to comply 

23 with the requirements of section 125, 127(a), or para24 graph (4), (5), (6), (7), (8), (9), (10), or (11) of section 

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1 ments under State law for any term or item that the 

2 Board has determined to be substantially the same in 

3 meaning under section 111(a)(2) as any of the terms or 

4 items referred to in section 127(a), or paragraph (4), (5), 

5 (6), (7), (8), (9), (10), (11), or (13) of section 127(b). 

6 SEC. 202. REQUIREMENTS RELATING TO LATE PAYMENT 

7 DEADLINES AND PENALTIES. 

8 Section 127 of the Truth in Lending Act (15 U.S.C. 

9 1637) is amended by inserting after subsection (l) (as 

10 added by section 104 of this Act) the following new sub11 section: 

12 ‘‘(m) REQUIREMENTS RELATING TO LATE PAYMENT

13 DEADLINES AND PENALTIES.— 

14 ‘‘(1) LATE PAYMENT DEADLINE AND POSTMARK

15 DATE REQUIRED TO BE DISCLOSED.—In the case of 

16 a credit card account under an open end consumer 

17 credit plan under which a late fee or charge may be 

18 imposed due to the failure of the obligor to make 

19 payment on or before the due date for such pay20 ment, the periodic statement required under sub21 section (b) with respect to the account shall include, 

22 in a conspicuous location on the billing statement— 

23 ‘‘(A) the date by which the payment must 

24 be postmarked, if paid by mail, in order to 


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1 avoid the imposition of a late payment fee with 

2 respect to the payment; and 

3 ‘‘(B) a statement that no late fee may be 

4 imposed in connection with a payment made by 

5 mail which was postmarked on or before the 

6 postmark date. 

7 ‘‘(2) DISCLOSURE OF INCREASE IN INTEREST

8 RATES FOR LATE PAYMENTS.—If 1 or more late 

9 payments under an open end consumer credit plan 

10 may result in an increase in the annual percentage 

11 rate the account, the statement required under sub12 section (b) with respect to the account shall include 

13 conspicuous notice of such fact, together with the 

14 applicable penalty annual percentage rate, in close 

15 proximity to the disclosure required in paragraph (1) 

16 of the date on which payment is due under the 

17 terms of the account. 

18 ‘‘(3) REQUIREMENTS RELATING TO POSTMARK

19 DATE.— 

20 ‘‘(A) IN GENERAL.—The date included in 

21 a periodic statement pursuant to paragraph 

22 (1)(B) with regard to the postmark on a pay23 ment shall allow, in accordance with regulations 

24 prescribed by the Board under subparagraph 

25 (B), a reasonable time for the consumer to 


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1 make the payment and a reasonable time for 

2 the delivery of the payment by the due date. 

3 ‘‘(B) BOARD REGULATIONS.—The Board 

4 shall prescribe guidelines for determining a rea5 sonable period of time for making a payment 

6 and delivery of a payment for purposes of sub7 paragraph (A), after consultation with the Post8 master General and representatives of consumer 

9 and trade organizations. 

10 ‘‘(4) PAYMENT AT LOCAL BRANCHES.—If the 

11 creditor, in the case of a credit card account referred 

12 to in paragraph (1), is a financial institution which 

13 maintains branches or offices at which payments on 

14 any such account are accepted from the obligor in 

15 person, the date on which the obligor makes a pay16 ment on the account at such branch or office shall 

17 be considered as the date on which the payment is 

18 made for purposes of determining whether a late fee 

19 or charge may be imposed due to the failure of the 

20 obligor to make payment on or before the due date 

21 for such payment, to the extent that such payment 

22 is made before the close of business of the branch 

23 or office on the business day immediately preceding 

24 the due date for such payment.’’. 


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1 TITLE III—PROTECTION OF 

2 YOUNG CONSUMERS 

3 SEC. 301. EXTENSIONS OF CREDIT TO UNDERAGE CON4 SUMERS. 

5 Section 127(c) of the Truth in Lending Act (15 

6 U.S.C. 1637(c)) is amended by adding at the end the fol7 lowing new paragraph: 

8 ‘‘(8) APPLICATIONS FROM UNDERAGE CON9 SUMERS.— 

10 ‘‘(A) PROHIBITION ON ISSUANCE.—No 

11 credit card may be issued to, or open end credit 

12 plan established on behalf of, a consumer who 

13 has not attained the age of 18, unless the con14 sumer has submitted a written application to 

15 the card issuer that meets the requirements of 

16 subparagraph (B). 

17 ‘‘(B) APPLICATION REQUIREMENTS.—An 

18 application to open a credit card account by an 

19 individual who has not attained the age of 18 

20 as of the date of submission of the application 

21 shall require— 

22 ‘‘(i) the signature of the parent, legal 

23 guardian, or spouse of the consumer, or 

24 any other individual having a means to 

25 repay debts incurred by the consumer in 


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1 connection with the account, indicating 

2 joint liability for debts incurred by the con3 sumer in connection with the account be4 fore the consumer has attained the age of 

5 18; 

6 ‘‘(ii) submission by the consumer of 

7 financial information indicating an inde8 pendent means of repaying any obligation 

9 arising from the proposed extension of 

10 credit in connection with the account; or 

11 ‘‘(iii) proof by the consumer that the 

12 consumer has completed a credit coun13 seling course of instruction by a nonprofit 

14 budget and credit counseling agency ap15 proved by the Board for such purpose. 

16 ‘‘(C) MINIMUM REQUIREMENTS FOR COUN17 SELING AGENCIES.—To be approved by the 

18 Board under subparagraph (B)(iii), a credit 

19 counseling agency shall, at a minimum— 

20 ‘‘(i) be a nonprofit budget and credit 

21 counseling agency, the majority of the 

22 board of directors of which— 

23 ‘‘(I) is not employed by the agen24 cy; and 


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1 ‘‘(II) will not directly or indi2 rectly benefit financially from the out3 come of a credit counseling session; 

4 ‘‘(ii) if a fee is charged for counseling 

5 services, charge a reasonable fee, and pro6 vide services without regard to ability to 

7 pay the fee; and 

8 ‘‘(iii) provide trained counselors who 

9 receive no commissions or bonuses based 

10 on referrals, and demonstrate adequate ex11 perience and background in providing cred12 it counseling.’’. 

13 SEC. 302. ENHANCED PENALTIES. 

14 Section 130(a)(2)(A) of the Truth in Lending Act 

15 (15 U.S.C. 1640 (a)(2)(A)(iii)) is amended— 

16 (1) by striking ‘‘or (iii) in the’’ and inserting 

17 the following: 

18 ‘‘(iii) in the case of an individual action relating 

19 to an open end credit plan that is not secured by 

20 real property or a dwelling, twice the amount of any 

21 finance charge in connection with the transaction, 

22 with a minimum of $500 and a maximum of $5,000 

23 or such higher amount as may be appropriate in the 

24 case of an established pattern or practice of such 

25 failures; or 


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1 ‘‘(iv) in the’’; and 

2 (2) in clause (ii), by striking ‘‘this subpara3 graph’’ and inserting ‘‘this clause’’. 

4 SEC. 303. RESTRICTIONS ON CERTAIN AFFINITY CARDS. 

5 Section 127 of the Truth in Lending Act (15 U.S.C. 

6 1637) is amended by inserting after subsection (m) (as 

7 added by section 202 of this Act) the following new sub8 section: 

9 ‘‘(n) RESTRICTIONS ON ISSUANCE OF AFFINITY

10 CARDS TO STUDENTS.—No credit card account under an 

11 open end credit plan may be established by an individual 

12 who has not attained the age of 18 as of the date of sub13 mission of the application pursuant to any agreement re14 lating to affinity cards, as defined by the Board, between 

15 the creditor and an institution of higher education (as de16 fined in section 101(a) of the Higher Education Act of 

17 1965), unless the requirements of section 127(c)(8) are 

18 met with respect to the obligor.’’. 

Æ 


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