I
104TH CONGRESS
1ST SESSION
H. R. 1105
To amend the Truth in Lending Act to require additional disclosures with
respect to credit card accounts, to require a study of the competitiveness
of the credit card industry, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MARCH 1, 1995
Mr. SCHUMER introduced the following bill; which was referred to the
Committee on Banking and Financial Services
A BILL
To amend the Truth in Lending Act to require additional
disclosures with respect to credit card accounts, to re-
quire a study of the competitiveness of the credit card
industry, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Credit and Charge
Card Disclosure and Interest Rate Amendments Act of
1995’’.
SEC. 2. FINDINGS.
The Congress finds that—
(1) the annual percentage rates applicable to
credit balances on credit card accounts have not
been responsive to the steady decline in creditors’
costs of funds during the 3 years preceding the date
of the enactment of this Act, as would be expected
if the credit card market were truly competitive;
(2) such annual percentage rates should be re-
duced; and
(3) more public disclosure of such annual rates
should make the market in credit cards more com-
petitive.
SEC. 3. DISCLOSURE REQUIREMENTS RELATING TO CRED-
IT CARD ACCOUNTS.
(a) STATEMENTS TO INCLUDE BETTER INFORMA-
TION REGARDING INTEREST BURDEN.—Section 127(b) of
the Truth in Lending Act (15 U.S.C. 1637(b)) is amended
by adding at the end the following:
‘‘(11) In the case of any credit card account
under an open end consumer credit plan—
‘‘(A) the total of all amounts paid by the
obligor with respect to the account during the
current year;
‘‘(B) the total amount of finance charges
paid by the obligor with respect to the account
during the current year, stated next to the in-
formation required by subparagraph (A); and
‘‘(C) the date by which the obligor will
complete paying the current outstanding bal-
ance of the account (including all finance
charges that will be added to the account with
respect to that balance in the future) if the obli-
gor pays each month only the minimum amount
required to be paid under the plan.’’.
(b) STATEMENTS TO INCLUDE INFORMATION RE-
GARDING CHANGES IN TERMS.—Section 127 of the Truth
in Lending Act (15 U.S.C. 1637) is amended by adding
at the end the following new subsection:
‘‘(h) STATEMENTS REQUIRED TO INCLUDE REVISED
TABLE OF TERMS BEFORE CHANGE IN TERMS IS EFFEC-
TIVE.—In the case of any credit card account under an
open end consumer credit plan, no change in any term
applicable to such plan which is described in paragraph
(1)(A), (1)(B), or (4)(A) of subsection (c) may take effect
unless, before the effective date of the change, 1 or more
of the statements which are transmitted pursuant to sub-
section (b) contain the information described in such para-
graphs (1)(A), (1)(B), and (4)(A) which is applicable to
the plan (as in effect after such change) in the tabular
format required under section 122(c).’’.
(c) ENVELOPES TO INCLUDE TABLES.—Section 127
of the Truth in Lending Act (15 U.S.C. 1637) is amended
by adding after subsection (h) (as added by subsection (b)
of this section) the following new subsection:
‘‘(i) ENVELOPES TO CONTAIN INFORMATION IN TAB-
ULAR FORMAT.—The envelope containing any application
or solicitation referred to in subsection (c)(1)(A) shall con-
tain the information required to be included in such appli-
cation, solicitation, or statement under any such sub-
section in the tabular format required under section
122(c).’’.
(d) ADVERTISING TO INCLUDE TABLES.—Section
143 of the Truth in Lending Act (15 U.S.C. 1663) is
amended—
(1) by striking ‘‘No advertisement’’ and insert-
ing ‘‘(a) IN GENERAL.—Subject to subsection (b),
no advertisement’’; and
(2) by adding at the end the following new sub-
section:
‘‘(b) CREDIT CARD ACCOUNTS.—
‘‘(1) IN GENERAL.—Subject to paragraphs (2)
and (3), any advertisement to aid or assist directly
or indirectly the extension of consumer credit
through a credit card account under an open end
consumer credit plan shall include, in a clear and
conspicuous disclosure—
‘‘(A) the information described in para-
graphs (1) and (2) of subsection (a);
‘‘(B) the information described in para-
graphs (1)(A) and (1)(B)(i) of section 127(c)
disclosed in the tabular format required under
section 122(c); and
‘‘(C) any other information the Board may
require in the form prescribed by the Board.
‘‘(2) RADIO ADVERTISING.—Any advertisement
described in paragraph (1) which is made by means
of any radio broadcast or other audio broadcast or
transmission to the public shall include a verbal dis-
closure of—
‘‘(A) the information described in para-
graphs (1) and (2) of subsection (a);
‘‘(B) any fee described in paragraph
(1)(A)(ii) or (1)(B)(i) of section 127(c) which is
applicable with respect to such account or any
transaction under such account; and
‘‘(C) if section 127(c)(1)(A)(iii) is applica-
ble with respect to such account, that fact and
the information described in subclause (II) of
such section.
‘‘(3) TELEVISION
ADVERTISING.—Any adver-
tisement described in paragraph (1) which is made
by means of any television broadcast or other video
broadcast or transmission to the public shall include
the information described in paragraphs (1)(A) and
(1)(B)(i) of section 127(c) disclosed clearly and con-
spicuously in the tabular format required under sec-
tion 122(c).
‘‘(4) EXCEPTION FOR PROMOTIONAL ADVERTIS-
ING.—The provisions of this subsection shall not
apply to any advertising which is solely promotional
and does not involve any solicitation of business by
any creditor.’’.
(e) SEPARATE DISCLOSURE IN THE ‘‘SCHUMER BOX’’
OF RATE FOR CASH ADVANCES IF SUCH RATE DIFFERS
FROM OTHER RATES.—Section 122(c)(2) of the Truth in
Lending Act (15 U.S.C. 1631(c)(2)) is amended by adding
at the end the following new subparagraph:
‘‘(D) RATES
APPLICABLE
TO
CASH
AD-
VANCES.—If a different annual percentage rate
described in section 127(c)(1)(A) is applicable
to extensions of credit in the form of cash than
is applicable to other extensions of credit to
which such section applies, the table prescribed
by the Board under this subsection shall list
such rate separately from other rates and under
a separate heading.’’.
(f) BETTER DISCLOSURE OF GRACE PERIOD.—Sec-
tion 127(c)(1)(A)(iii) of the Truth in Lending Act (15
U.S.C. 1637(c)(1)(A)(iii)) is amended by adding at the
end the following:
‘‘(III) The terms and conditions
under which such ‘grace period’ is for-
feited, stated clearly and in conspicu-
ous bold print.’’.
(g) TOLL-FREE NUMBER FOR INFORMATION ON LOW
RATE CREDIT CARDS.—The Board of Governors of the
Federal Reserve System shall establish, maintain, and
publicize a toll-free telephone line for consumers to call
for free information on the availability of low-rate credit
cards.
(h) TECHNICAL AND CONFORMING AMENDMENTS.—
(1) Section 122(c) of the Truth in Lending Act
(15 U.S.C. 1631(c)) is amended by inserting ‘‘and
in sections 127(h) and 143(b)’’ after ‘‘of section
127(c)’’.
(2) The heading for section 122(c) of the Truth
in Lending Act (15 U.S.C. 1631(c)) is amended by
striking ‘‘SECTION 127(c)’’ and inserting ‘‘SECTIONS
127(c), 127(h), and 143(b)’’.
SEC. 4. NOTICE AND ELECTION REQUIRED IN CASE OF IN-
CREASE IN RATES UNDER CREDIT CARD AC-
COUNTS.
(a) IN GENERAL.—Section 127 of the Truth in Lend-
ing Act (15 U.S.C. 1637) is amended by adding after sub-
section (i) (as added by section 3(c) of this Act) the follow-
ing new subsection:
‘‘(j) NOTICE AND CONSUMER ELECTION IN CASE OF
INCREASE IN RATES OR FEES UNDER CREDIT CARD AC-
COUNTS.—
‘‘(1) NOTICE REQUIRED.—
‘‘(A) IN
GENERAL.—No increase in any
annual percentage rate applicable to the balance
(or any portion of any such balance) outstand-
ing on any credit extended in connection with
any credit card account under any open end
consumer credit plan, and no change in any
term described in paragraph (1)(A) or (1)(B) of
subsection (c) which adversely affects the
consumer, may take effect before the end of the
30-day period beginning on the date the card-
holder receives notice and a description of such
increase or change and the procedures for mak-
ing an election under paragraph (2).
‘‘(B) FORM
OF
NOTICE.—Notice to a
consumer under subparagraph (A) shall be in
the form of the following sentence appearing in
conspicuous bold print on the outside of an en-
velope containing a statement transmitted to
the consumer pursuant to subsection (b): ‘Fed-
eral law requires the following notification: The
terms of your credit card contract have been
changed. Look inside this envelope for impor-
tant details.’.
‘‘(C) FORM
OF
DESCRIPTION.—The de-
scription required by subparagraph (A) shall
be—
‘‘(i) included in an envelope contain-
ing 
a 
statement 
transmitted 
to 
the
consumer pursuant to subsection (b) and
on which appears a notice in accordance
with subparagraph (B);
‘‘(ii) on a document that is separate
from the statement transmitted pursuant
to subsection (b); and
‘‘(iii) in the tabular format required
under section 122(c).
‘‘(2) ELECTION TO RESCIND FURTHER USE OF
ACCOUNT.—Any cardholder who receives notice
under paragraph (1) with respect to any credit card
account under any open end consumer credit plan
may notify the creditor that such cardholder is re-
scinding any use of the account to obtain any addi-
tional extensions of credit under the plan effective
upon such notice.
‘‘(3) OUTSTANDING BALANCE SUBJECT TO EX-
ISTING RATES UPON ELECTION.—If any cardholder
with respect to any credit card account under any
open end consumer credit plan notifies the creditor
of the cardholder’s election, pursuant to paragraph
(2), to rescind the use of the account, any balance
outstanding with respect to such account shall be
subject to any repayment rate, and any other terms,
in effect with respect to such balance on the date the
cardholder receives the notice under paragraph (1).
‘‘(4) ANY SUBSEQUENT EXTENSION OF CREDIT
NEGATES ELECTION.—
‘‘(A) IN GENERAL.—If any person—
‘‘(i) makes an election under para-
graph (2) to rescind the use of any credit
card account to obtain any extension of
credit under any open end consumer credit
plan after the date of notice pursuant to
such election; and
‘‘(ii) after the date of notice of such
election, engages in any transaction with
respect to such account, other than any
transaction in connection with the repay-
ment of any balance outstanding under the
account,
paragraph (3) shall cease to apply with respect
to such balance.
‘‘(B) LIABILITY FOR FORGONE INTEREST
AND FINANCE CHARGES.—Any person referred
to in subparagraph (A) shall be liable for any
difference between—
‘‘(i) the amount of interest and fi-
nance charges paid by that person on any
balance outstanding under the credit plan
referred to in such subparagraph in ac-
cordance with paragraph (3) since the date
of the notice under paragraph (2); and
‘‘(ii) the amount of such charges the
person would have been required to pay
under the plan but for paragraph (3).’’.
SEC. 5. FINANCE CHARGE NOT TO BE IMPOSED BEFORE
DATE CHARGE IS POSTED TO CREDIT CARD
ACCOUNT.
(a) IN GENERAL.—The Truth in Lending Act (15
U.S.C. 1601 et seq.) is amended by inserting after section
127A the following:
‘‘§ 127B. Limitation on imposing finance charges on
certain consumer accounts
‘‘No finance charge may be imposed on an extension
of credit with respect to a credit card account under an
open end consumer credit plan before the date the exten-
sion of credit is posted to the account.’’.
(b) CLERICAL AMENDMENT.—The table of sections
at the beginning of chapter 2 of the Truth in Lending
Act (15 U.S.C. 121 et seq.) is amended by inserting after
the item relating to section 127A the following:
‘‘127B. Limitation on imposing finance charges on certain consumer accounts.’’.
SEC. 6. LIMITATION ON USE OF CREDIT INFORMATION BY
ISSUERS OF CREDIT CARDS.
(a) LIMITATION.—The Truth in Lending Act (15
U.S.C. 1601 et seq.) is amended by inserting after section
127B (as added by section 5) the following:
‘‘§ 127C. Limitation on use of information by credit
card issuers
‘‘(a) LIMITATION.—A card issuer shall not use, sell,
or otherwise disclose for direct marketing purposes, infor-
mation regarding the use of a consumer credit card issued
by the card issuer (including any list of cardholders
derived from such information) if—
‘‘(1) the card issuer has not notified the card-
holder in accordance with subsection (b) that the in-
formation will be used for those purposes; or
‘‘(2) the cardholder has notified the card issuer
in accordance with subsection (c) that the cardholder
does not consent to the use of that information for
those purposes.
‘‘(b) NOTIFICATION BY CARD ISSUER.—
‘‘(1) TIME.—A card issuer shall notify a card-
holder for purposes of subsection (a)(1) in writing—
‘‘(A) before the first transaction is made
under the credit card; and
‘‘(B) in at least one billing cycle of each
calendar year in which the card issuer is re-
quired to send a billing statement to the card-
holder under applicable Federal law.
‘‘(2) CONTENT.—Each notification under para-
graph (1) shall include—
‘‘(A) a clear and conspicuous statement
that information regarding the use of the credit
card can be disclosed for direct marketing pur-
poses unless the cardholder notifies the card is-
suer, in writing or, if applicable, by calling any
toll free telephone number established by the
card issuer for that purpose, that the card-
holder does not consent to the use of that infor-
mation for those purposes;
‘‘(B) an address that the cardholder may
write to for purposes of subsection (a)(2); and
‘‘(C) either—
‘‘(i) a postage paid, self-addressed
form which the cardholder may sign and
mail to the card issuer to notify the card
issuer for purposes of subsection (a)(2); or
‘‘(ii) in a clear and conspicuous man-
ner, a toll free telephone number that the
card issuer establishes for notifying the
card issuer for purposes of subsection
(a)(2).
‘‘(3) FORM.—Each notification under para-
graph (1) shall be made on a document that is sepa-
rate and distinct from any other information with
which it is provided to the cardholder.
‘‘(c) NOTIFICATION BY CARDHOLDER.—A cardholder
may notify a card issuer for purposes of subsection
(a)(2)—
‘‘(1) by calling any toll free telephone number
that is established by the card issuer for that pur-
pose;
‘‘(2) by signing and mailing to the card issuer
any form provided by the card issuer in accordance
with subsection (b); or
‘‘(3) otherwise in writing to the address pro-
vided under subsection (b)(2)(B).
‘‘(d) LIMITED REQUIREMENTS.—Nothing in this sec-
tion shall be construed or interpreted as a general require-
ment for credit card issuers to notify cardholders. The re-
quirements of subsection (b) are established solely to en-
able credit card issuers to satisfy the conditions of sub-
section (a) for purposes of using cardholder information
for direct marketing purposes.
‘‘(e) DIRECT MARKETING DEFINED.—For purposes
of this section, the term ‘direct marketing’ means selling
or offering for sale, directly to a consumer or a specific
group of consumers, a good or service.’’.
(b) CLERICAL AMENDMENT.—The table of sections
at the beginning of chapter 2 of the Truth in Lending
Act (15 U.S.C. 1601 et seq.), as amended by this Act,
is further amended by inserting after the item relating to
section 127B (as added by section 5) the following:
‘‘127C. Limitation on use of information by credit card issuers.’’.
SEC. 7. STUDY OF COMPETITIVENESS OF CREDIT CARD
MARKET.
(a) STUDY REQUIRED.—The Comptroller General of
the United States, in consultation with the Board of Gov-
ernors of the Federal Reserve System, shall conduct a
study of the market in credit cards to determine whether
such market is competitive.
(b) SPECIFIC ISSUES REQUIRED TO BE STUDIED.—
The study conducted pursuant to subsection (a) shall in-
clude the following:
(1) The annual percentage rates of interest on
credit extended through credit cards (as defined in
section 103(k) of the Truth in Lending Act) during
the 66-month period beginning 5 years before the
date of the enactment of this Act.
(2) The cost of funds to creditors (as defined
in section 103(f) of the Truth in Lending Act) for
the extension of such credit during such period.
(3) An analysis of the change in the spread be-
tween the cost of such funds to creditors and the an-
nual percentage rates of interest on credit extended
through credit cards during such period.
(4) Whether such factors indicate that competi-
tion exists among creditors for new credit card ac-
counts and the degree to which such competition ex-
ists among the 10 credit card issuers who have is-
sued the largest number of cards.
(5) Whether the degree of competition among
the 10 credit card issuers who have issued the larg-
est number of cards differs from the degree of com-
petition in—
(A) the credit card industry generally; and
(B) other consumer loan markets, includ-
ing housing loans and auto loans.
(6) If there is a difference in the degree of com-
petition identified in the markets referred to in para-
graph (5), the reason for the disparity.
(7) The competitive barriers to entry into—
(A) the credit card market; and
(B) the group of 10 credit card issuers
having the largest number of credit card ac-
counts.
(c) REPORT REQUIRED BY END OF 9-MONTH PE-
RIOD.—Before the end of the 9-month period beginning
on the date of the enactment of this Act, the Comptroller
General shall submit a report to the Congress contain-
ing—
(1) the findings and conclusions of the Comp-
troller General with respect to the study conducted
pursuant to subsection (a); and
(2) such recommendations for legislative or ad-
ministrative action as the Comptroller General deter-
mines to be appropriate.
SEC. 8. REQUIREMENT TO PROVIDE ANNUAL STATEMENTS
OF PAYMENTS MADE ON CREDIT CARD AC-
COUNTS.
(a) IN GENERAL.—Section 127 of the Truth in Lend-
ing Act (15 U.S.C. 1637) is amended by adding after sub-
section (j) (as added by section 4(a) of this Act) the
following new subsection:
‘‘(k) STATEMENTS OF COSTS OF CREDIT CARDS.—
‘‘(1) DISCLOSURE REQUIREMENT.—A card is-
suer under an open end credit plan shall include
with the first 3 statements provided in a year under
subsection (b) with respect to the plan a separate
statement of the total amounts the obligor paid to
the card issuer in the preceding year for credit cards
issued under the plan—
‘‘(A) as fees or charges described in sub-
sections (c)(4) (A) and (B); and
‘‘(B) as finance charges (other than those
referred to in subparagraph (B)).
‘‘(2) TABULAR FORMAT.—
‘‘(A) IN
GENERAL.—The statement re-
quired under paragraph (1) shall disclose the
fees and charges described in paragraph (1) in
the form and manner which the Board shall
prescribe by regulations.