I
107TH CONGRESS
1ST SESSION
H. R. 1060
To amend the Truth in Lending Act to prohibit unfair or deceptive creditor
acts or practices, 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, 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 prohibit unfair or
deceptive creditor acts or practices, 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 Card Predatory
Practices Prevention Act of 2001’’.
SEC. 2. PROHIBITION ON UNFAIR OR DECEPTIVE CRED-
ITOR ACTS OR PRACTICES IN SOLICITATIONS
FOR CREDIT CARDS.
(a) IN GENERAL.—Section 127 of the Consumer
Credit Protection Act (15 U.S.C. 1637) is amended by
adding at the end the following new subsection:
‘‘(h) UNFAIR OR DECEPTIVE CREDITOR ACTS AND
PRACTICES.—
‘‘(1) IN GENERAL.—In the case of a credit card
account under an open-end consumer credit plan, a
creditor shall not engage in an unfair or deceptive
act or practice.
‘‘(2) BOARD DEFINITION OF UNFAIR OR DECEP-
TIVE
CREDITOR
ACT
OR
PRACTICE.—The Board
shall, in regulations, define what constitutes an un-
fair or deceptive creditor act or practice in violation
of this subsection.
‘‘(3) SPECIFIC ACTS AND PRACTICES ARE UN-
FAIR AND DECEPTIVE.—For purposes of such regu-
lations, a creditor shall be determined to have en-
gaged in an unfair and deceptive act or practice if—
‘‘(A) in connection with any solicitation to
open a credit card account for any consumer
under an open end consumer credit plan, the
creditor—
‘‘(i) requires a consumer to pay an
application, processing or other fee as a
condition for applying for a credit card ac-
count, or in advance of receiving the disclo-
sures required by this section;
‘‘(ii) requires a consumer to purchase
any membership, product or service, in-
cluding any credit protection, credit anal-
ysis, or credit education product or service,
as a condition for receiving a credit card
account;
‘‘(iii) represents that the credit card
account does not require an annual fee,
when the consumer is required to pay an
enrollment fee, membership fee, or any
form of service fee on a recurring basis;
‘‘(iv) represents that a consumer is
pre-approved, guaranteed approval, or oth-
erwise has met the creditor’s underwriting
standards to qualify for a specific offer of
credit, when the consumer does not meet
the standards for such credit, no such
standards exist, or the solicitation con-
stitutes only an invitation to apply for
credit or anything other than a firm offer
of credit to the consumer;
‘‘(v) represents that a consumer quali-
fies to receive, or qualifies to apply to re-
ceive, a credit card account, in which any
stated term, including the line of credit
amount, annual interest rate, annual fee
amount or other term—
‘‘(I) is not available to the con-
sumer upon initiation of the account,
but is made available, or is intended
at the time of the representation to be
made available, in installments over
time in response to the consumer’s
positive record of credit use and pay-
ment;
‘‘(II) is an annual interest rate
or other term the issuer no longer
makes available as part of credit card
accounts for which the consumer
qualifies, or that the issuer has reason
to know will no longer be available to
such consumer prior to the expiration
of such period, as defined by regula-
tion, that permits reasonable time for
consumer response to the solicitation;
and
‘‘(III) is an annual interest rate
or other term that the issuer makes
available only to selected consumers,
or to consumers with preferred credit
scores or ratings;
‘‘(vi) represents that a credit card ac-
count provides for credit protection, over-
draft protection, travel insurance, or other
account-related benefits and services that
the issuer makes available separately, and
at additional charge, to card holders; or
‘‘(vii) issues a credit card account to
a consumer who has responded to a direct
solicitation, the account terms of which are
materially different, in terms of being less
favorable to the consumer, than the terms
included in the solicitation that resulted in
the consumer’s application;
‘‘(B) in administering a credit card ac-
count for any consumer under an open end con-
sumer credit plan, the creditor—
‘‘(i) enrolls a consumer in paid mem-
berships or in any account-related service
or program, including credit insurance or
credit protection, without the clear and un-
ambiguous consent of the consumer after
receiving complete disclosure of the terms
and conditions for such membership, serv-
ice, or program, as provided in regulation;
‘‘(ii) posts a charge or debit to a con-
sumer’s account for any product, service,
or membership without the clear and un-
ambiguous consent of the consumer after
receiving complete disclosure of the terms
and conditions for such membership, serv-
ice, or program, as provided in regulation;
‘‘(iii) engages in a pattern or practice
of—
‘‘(I) failing to mail the initial
periodic statement required under
subsection (b) of this section, or de-
laying or withholding any subsequent
periodic statement, for the purpose, or
with the effect, of causing the con-
sumer to incur late payment fees or
other fees or penalties, or additional
interest charges with respect to such
account;
‘‘(II) scheduling payment due
dates in periodic statements to coin-
cide with holidays, weekend days, or
other days that the creditor is not
open for business, or otherwise not
available to receive or process billing
payments, for the purpose, or with the
effect, of causing the consumer to
incur late payment fees or other pen-
alties or additional interest charges
with respect to the account; or
‘‘(III) withholding the posting of
payments to a credit card account re-
ceived on or before the payment due
date stated in periodic statements for
the purpose, or with the effect, of
causing the consumer to incur late
payment fees or other penalties or ad-
ditional interest charges with respect
to such account;
‘‘(iv) increases the annual interest
rate on a credit card account, or removes
or increases any introductory interest rate
applicable to such account, for reasons
other than actions or omissions of the card
holder that are directly related to such ac-
count, which shall be clearly and conspicu-
ously described to the card holder in the
information required to be disclosed under
subsection (a), and then only after the con-
sumer has been provided with appropriate
notice, as provided in regulation; or
‘‘(v) subject to paragraph (5), refuses
to cancel or close a credit card account
upon the request of a consumer; or
‘‘(C) the creditor engages in any other
practice that the Board shall determine, by reg-
ulation or order, to be unfair, deceptive, in-
tended to misrepresent or confuse the terms of
a credit offer, or designed to evade the provi-
sions of this subsection.
‘‘(4) NOTICE TO CONSUMER OF FAILURE TO
QUALIFY.—The Board shall prescribe regulations for
procedures under which the creditor shall provide
notice to any consumer of—
‘‘(A) any failure of the consumer to qualify
for an extension of credit or a credit card under
the terms and conditions in an offer or solicita-
tion and the reasons for such failure to qualify;
‘‘(B) the terms of a credit card account, if
any, that the consumer is qualified to receive,
which shall include all disclosures required
under subsection (c)(1) and shall meet all re-
quirements of this section; and
‘‘(C) the procedures required of the con-
sumer to receive, or to apply to receive, the
credit card account disclosed under subpara-
graph (B).
‘‘(5) PROCEDURES
FOR
CANCELLATION.—A
creditor may define procedures for requesting can-
cellation of an account, which shall be clearly de-
scribed in the information required to be disclosed
under subsection (a) and shall be reasonable.’’.
(b) IMPROVED ENFORCEMENT AUTHORITY.—Section
127 of the Consumer Credit Protection Act (15 U.S.C.
1637) is amended by inserting after subsection (h) (as
added by subsection (a) of this section) the following new
subsection:
‘‘(i) STATE ACTION FOR VIOLATIONS.—
‘‘(1) AUTHORITY OF THE STATES.—In addition
to such other remedies as are provided under State
law, if the attorney general of a State, or an officer
authorized by the State, has reason to believe that
any creditor has violated or is violating subsection
(h), the State may—
‘‘(A) bring an action on behalf of the resi-
dents of the State to enjoin such violation in
any appropriate United States district court or
in any other court of competent jurisdiction;
and
‘‘(B) bring an action on behalf of the resi-
dents of the State to enforce compliance with
subsection (h), to obtain damages, restitution,
or other compensation on behalf of the resi-
dents of such State, or to obtain such further
and other relief as the court may deem appro-
priate.
‘‘(2) RIGHTS OF FEDERAL AGENCIES.—
‘‘(A) NOTICE.—The State shall serve prior
written notice of any action commenced under
paragraph (1) with respect to any depository in-
stitution upon the Federal agency described in
subsection (a) or (c) of section 108 with respect
to such creditor and shall provide such agency
with a copy of the complaint unless such prior
notice is not feasible, in which case the State
shall serve such notice immediately upon insti-
tuting such action.
‘‘(B) INTERVENING ACTION.—Any agency
described in subsection (a) or (c) of section 108
which receives a notice from a State under sub-
paragraph (A) with respect to any action de-
scribed in such subparagraph shall have the
right—
‘‘(i) to move to stay the action, pend-
ing the final disposition of a pending Fed-
eral matter as described in paragraph (4);
‘‘(ii) to intervene in an action under
paragraph (1);
‘‘(iii) upon so intervening, to be heard
on all matters arising therein;
‘‘(iv) to remove the action to the ap-
propriate United States district court; and
‘‘(v) to file petitions for appeal.
‘‘(3) INVESTIGATORY
POWERS.—For purposes
of bringing any action under this subsection, nothing
in this subsection shall prevent the attorney general,
or officers of such State who are authorized by such
State to bring such actions, from exercising the pow-
ers conferred on the attorney general or such offi-
cers by the laws of such State to conduct investiga-
tions or to administer oaths or affirmations or to
compel the attendance of witnesses or the production
of documentary and other evidence.
‘‘(4) LIMITATION
ON
STATE
ACTION
WHILE
FEDERAL
ACTION
IS
PENDING.—If any Federal
agency described in subsection (a) or (c) of section
108 has instituted an enforcement action for a viola-
tion of subsection (h), no State may, during the
pendency of such action, bring an action under this
subsection against any creditor named in the en-
forcement action for any violation of subsection (h)
that is alleged in that action.’’.
(c) EFFECTIVE DATE OF REGULATIONS.—
(1) PUBLICATION OF FINAL REGULATIONS.—
Notwithstanding section 105(d) of the Truth in
Lending Act, the Board of Governors of the Federal
Reserve System shall publish in final form in the
Federal Register before the end of the 6-month pe-
riod beginning on the date of the enactment of this
Act any regulations required under the amendments
made by subsection (a) or (b) and such regulations
as the Board determines to be appropriate to imple-
ment such amendments.
(2) EFFECTIVE
DATE.—The regulations pub-
lished in final form in accordance with paragraph
(1) shall take effect not later than 90 days after the
date of such publication.
Æ