H.R. 1276 Credit Card Consumer Protection Act of 1999

To amend the Truth in Lending Act to protect consumers from certain unreasonable practices of creditors which result in higher fees or rates of interest for credit cardholders, and for other purposes.
Credit Card Consumer Protection Act of 1999 (Introduced in
House)

HR 1276 IH

To amend the Truth in Lending Act to protect consumers from
certain unreasonable practices of creditors which result in higher fees
or rates of interest for credit cardholders, and for other
purposes.

March 24, 1999

Ms. ROYBAL-ALLARD (for herself, Mr. LUTHER, Mr. SHOWS, Mr. GREEN of
Texas, Mr. PASTOR, Mr. BROWN of California, Ms. LEE, Mr. STARK, Mr.
DAVIS of Illinois, Mr. FILNER, Mr. DIXON, Mr. OLVER, Mr. GEORGE MILLER
of California, Mr. HINCHEY, and Ms. WOOLSEY) introduced the following
bill; which was referred to the Committee on Banking and Financial
Services

To amend the Truth in Lending Act to protect consumers from
certain unreasonable practices of creditors which result in higher fees
or rates of interest for credit cardholders, 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 Card Consumer Protection
Act of 1999'.

SEC. 2. FEES FOR ON-TIME PAYMENTS PROHIBITED.

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) FEES FOR ON-TIME PAYMENTS PROHIBITED-

`(1) IN GENERAL- In the case of any credit card account
under an open-end consumer credit plan, no minimum finance charge for
any period (including any annual period), and no fee in lieu of a
minimum finance charge, may be imposed 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) 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. 3. FREEZE ON INTEREST RATE TERMS AND FEES ON CANCELED
CARDS.

Section 127 of the Truth in Lending Act (15 U.S.C. 1637) is
amended by inserting after subsection (h) (as added by section 2 of this
Act) the following new subsection:

`(i) 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 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 accountholder
receives notice of such increase.

`(2) INCREASE NOT EFFECTIVE FOR CANCELED ACCOUNTS- If an
accountholder referred to in paragraph (1) cancels the credit card
account before the beginning of the billing cycle referred to in such
paragraph and surrenders all unexpired credit cards issued in connection
with such account--

`(A) an annual percentage rate of interest applicable
after the cancellation with respect to the 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 annual percentage rate of
interest shall

contain a brief description of the right of the consumer--

`(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. 4. DISCLOSURE OF FEES AND INTEREST RATES ON CREDIT ADVANCES
THROUGH THE USE OF 3d PARTY CHECKS.

Section 127 of the Truth in Lending Act (15 U.S.C. 1637) is
amended by inserting after subsection (i) (as added by section 3 of this
Act) the following new subsection:

`(j) FEES AND INTEREST RATES ON CREDIT ADVANCES THROUGH THE USE
OF 3d 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
accountholder with any negotiable or transferable instrument for use in
making an extension of credit to the accountholder for the purpose of
making a transfer to a 3d 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 accountholder 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.'.

SEC. 5. PROHIBITION ON OVER-THE-LIMIT FEES IN CREDITOR-APPROVED
TRANSACTIONS.

Section 127 of the Truth in Lending Act (15 U.S.C. 1637) is
amended by inserting after subsection (j) (as added by section 4 of this
Act) the following new subsection:

`(k) 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 fee on the accountholder 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. 6. PROHIBITION ON 2-CYCLE BILLING.

Section 127 of the Truth in Lending Act (15 U.S.C. 1637) is
amended by inserting after subsection (k) (as added by section 5 of this
Act) the following new subsection:

`(l) PROHIBITION ON 2-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) of such extension of
credit.'.

SEC. 7. DISCLOSURES RELATED TO `TEASER RATES'.

Section 127(c) of the Truth in Lending Act (15 U.S.C. 1637(c))
is amended--

(1) by redesignating paragraph (5) as paragraph (6);
and

(2) by inserting after paragraph (4) the following new
paragraph:

`(5) 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 the case may
be.

`(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
date) and will be (insert 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 percentage
rate).'.

`(D) FORM OF DISCLOSURE- The disclosure 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. 8. DISCLOSURES RELATING TO THE DATES PAYMENTS ARE DUE.

Section 127(b)(9) of the Truth in Lending Act (15 U.S.C.
1637(b)(9)) is amended by striking `The date by which or the period (if
any) within which, payment must be made to avoid additional finance
charges,' and inserting `In a prominent place on the face of the
statement, the date of the last full business day on which payment may
be received before the imposition of late fees or additional finance
charges (without regard to whether payment may be received on a
subsequent nonbusiness day or during a portion of a subsequent business
day before any such fee or charge is imposed) and a conspicuous notice
that the failure to remit payment in sufficient time for the payment to
be processed by such date may result in substantial late fees or
additional finance charges,'.

SEC. 9. PROHIBITION ON MINIMUM PAYMENT AMOUNTS THAT RESULT IN
NEGATIVE AMORTIZATION.

Section 127 of the Truth in Lending Act (15 U.S.C. 1637) is
amended by inserting after subsection (l) (as added by section 6 of this
Act) the following new subsection:

`(m) PROHIBITION ON MINIMUM PAYMENT AMOUNTS THAT RESULT IN
NEGATIVE AMORTIZATION-

`(1) IN GENERAL- In the case of any credit card account
under an open-end consumer credit plan, the minimum amount of any
periodic payment required to be made on any outstanding balance may not
be less than the finance charge applicable with respect to such
outstanding balance for such period.

`(2) DISCLOSURES REQUIRED IN CASE OF LOW AMORTIZATION RATE-
If, in the case of any credit card account under an open-end consumer
credit plan, the minimum amount of any periodic payment required to be
made on any outstanding balance reduces the outstanding balance by less
than 2 percent of such balance, after payment of any finance charge and
fees imposed for such period, the periodic statement required under
subsection (b) with respect to such account shall include a conspicuous
notice in a prominent place on the statement of--

`(A) the fact that the outstanding balance will be
reduced by less than 2 percent if the consumer only pays the minimum
amount; and

`(B) the period of time which would be required to pay
off the outstanding balance if the consumer paid only the minimum amount
of each periodic payment required until such balance is fully
repaid.

`(3) EXCEPTION UNDER EXIGENT CIRCUMSTANCES- In addition to
any other authority of the Board under this title to prescribe
regulations, the Board may prescribe regulations which permit exceptions
to the application of paragraph (1) with respect to any consumer who
requests a creditor to agree to a payment deferral plan for a limited
period of time due to loss of employment, illness, or incapacity, or
such other exigent circumstances the Board may describe in such
regulations.'.

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