S 1395 ISCommentsClose CommentsPermalink

To prevent unfair practices in credit card accounts, and for other purposes.CommentsClose CommentsPermalink

May 15, 2007

Mr. LEVIN (for himself and Mrs. MCCASKILL) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban AffairsCommentsClose CommentsPermalink

To prevent unfair practices in credit card accounts, and for other purposes.CommentsClose CommentsPermalink

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

SECTION 1. SHORT TITLE.

This Act may be cited as the `Stop Unfair Practices in Credit Cards Act of 2007'.CommentsClose CommentsPermalink

SEC. 2. STOP UNFAIR INTEREST RATES AND FEES.

Section 163 of the Truth in Lending Act (15 U.S.C. 1666b) is amended--CommentsClose CommentsPermalink





(1) by striking the section title and all that follows through `If an open' and inserting the following:CommentsClose CommentsPermalink

`Sec. 163. Billing period and finance charges

`(a) Billing Period-CommentsClose CommentsPermalink





`(1) FOURTEEN-DAY MINIMUM- If an open';CommentsClose CommentsPermalink





(2) by striking `(b) Subsection (a)' and inserting the following:CommentsClose CommentsPermalink





`(2) EXCUSABLE CAUSE- Subsection (a)'; andCommentsClose CommentsPermalink





(3) by adding at the end the following:CommentsClose CommentsPermalink





`(b) No Interest Charge on Debt That Is Paid on Time- If an open end consumer credit plan provides a time period within which an obligor may repay any portion of the credit extended without incurring an interest charge, and the obligor repays all or a portion of such credit within the specified time period, the creditor may not impose or collect an interest charge on the portion of the credit that was repaid within the specified time period.CommentsClose CommentsPermalink





`(c) No Interest on Debt That Is Paid on Time and in Full- In an open end consumer credit plan, if a billing statement requests an obligor to repay within a specified time period all of the credit extended under the plan and related finance charges, and the obligor pays all of the specified amount within the specified time period, the creditor may not impose or collect an additional interest charge on the amount that was paid in full and within the specified time period.CommentsClose CommentsPermalink





`(d) Limits on Interest Rate Increases-CommentsClose CommentsPermalink





`(1) IN GENERAL- With respect to a credit card account under an open end consumer credit plan, the creditor shall not increase the periodic rate of interest applicable to extensions of credit while such account remains open, unless--CommentsClose CommentsPermalink





`(A) such increase is pursuant to the expiration of an introductory rate which was disclosed under section 127(c)(6);CommentsClose CommentsPermalink





`(B) such increase is pursuant to the application of a variable rate which was disclosed under section 127(c)(1)(A)(i)(II);CommentsClose CommentsPermalink





`(C) such increase is pursuant to the application of a penalty rate which was disclosed under subsections (a)(4) and (c)(1)(A)(i) of section 127; orCommentsClose CommentsPermalink





`(D) the obligor has provided specific written consent to such increase at the time such increase was proposed.CommentsClose CommentsPermalink





`(2) LIMIT ON PENALTY INTEREST RATE- If an obligor fails to repay an extension of credit in accordance with the terms of a credit card account under an open end consumer credit plan, and the creditor determines to apply a penalty rate, as described in paragraph (1)(C), notwithstanding paragraph (1)(D), such penalty rate may not, while such account is open, exceed 7 percentage points above the interest rate that was in effect with respect to such account on the date immediately preceding the first such penalty increase for such account.CommentsClose CommentsPermalink





`(e) Interest Rate Increases Limited to Future Credit Extensions- With respect to a credit card account under an open end consumer credit plan, if the creditor increases the periodic interest rate applicable to an extension of credit under the account, such increased rate shall apply only to extensions of credit made on and after the date of such increase under the account, and any extension of credit under such account made before the date of such increase shall continue to incur interest at the rate that was in effect on the date prior to the date of the increase.CommentsClose CommentsPermalink





`(f) No Interest Charges on Fees- With respect to a credit card account under an open end consumer credit plan, if the creditor imposes a transaction fee on the obligor, including a cash advance fee, late fee, over-the-limit fee, or balance transfer fee, the creditor may not impose or collect interest with respect to such fee amount.CommentsClose CommentsPermalink





`(g) Fixed Credit Limit- With respect to each credit card account under an open end consumer credit plan, the creditor shall offer to the obligor the option of obtaining a fixed credit limit that cannot be exceeded, and with respect to which any request for credit in excess of such fixed limit must be refused, without exception and without imposing an over-the-limit fee or other penalty on such obligor.CommentsClose CommentsPermalink





`(h) Over-the-Limit Fee Restrictions- With respect to a credit card account under an open end consumer credit plan, an over-the-limit fee, as described in section 127(c)(1)(B)(iii)--CommentsClose CommentsPermalink





`(1) may be imposed on the account only when an extension of credit obtained by the obligor causes the credit limit on such account to be exceeded, and may not be imposed when such credit limit is exceeded due to a penalty fee, such as a late fee or over-the-limit fee, that was added to the account balance by the creditor; andCommentsClose CommentsPermalink





`(2) may be imposed only once during a billing cycle if, on the last day of such billing cycle, the credit limit on the account is exceeded, and no additional over-the-limit fee shall be imposed in a subsequent billing cycle with respect to such excess credit, unless the obligor has obtained an additional extension of credit in excess of such credit limit during such subsequent cycle.CommentsClose CommentsPermalink





`(i) Other Fees-CommentsClose CommentsPermalink





`(1) NO FEE TO PAY A BILLING STATEMENT- With respect to a credit card account under an open end consumer credit plan, the creditor may not impose a separate fee to allow the obligor to repay an extension of credit or finance charge, whether such repayment is made by mail, electronic transfer, telephone authorization, or other means.CommentsClose CommentsPermalink





`(2) REASONABLE CURRENCY EXCHANGE FEE- With respect to a credit card account under an open end consumer credit plan, the creditor may impose a fee for exchanging United States currency with foreign currency in an account transaction, only if--CommentsClose CommentsPermalink





`(A) such fee reasonably reflects the actual costs incurred by the creditor to perform such currency exchange;CommentsClose CommentsPermalink





`(B) the creditor discloses publicly its method for calculating such fee; andCommentsClose CommentsPermalink





`(C) the primary Federal regulator of such creditor determines that the method for calculating such fee complies with this paragraph.CommentsClose CommentsPermalink





`(j) Annual Audit- The primary Federal regulator of a card issuer shall audit, on at least an annual basis, the credit card operations and procedures used by such issuer to ensure compliance with this section and section 164, including by reviewing a sample of billing statements to determine when they were mailed and received, and by reviewing a sample of credit card accounts to determine when and how payments and finance charges were applied. Such regulator shall promptly require the card issuer to take any corrective action needed to comply with this section.'.CommentsClose CommentsPermalink

SEC. 3. STOP UNFAIR APPLICATION OF CARD PAYMENTS.

Section 164 of the Truth in Lending Act (15 U.S.C. 1666c) is amended--CommentsClose CommentsPermalink





(1) by striking the section heading and all that follows through `Payments' and inserting the following:CommentsClose CommentsPermalink

`Sec. 164. Prompt and fair crediting of payments

`(a) In General- Payments'; andCommentsClose CommentsPermalink





(2) by adding at the end the following:CommentsClose CommentsPermalink





`(b) Application of Payment- Upon receipt of a payment from a cardholder, the card issuer shall--CommentsClose CommentsPermalink





`(1) apply the payment first to the card balance bearing the highest rate of interest, and then to each successive balance bearing the next highest rate of interest, until the payment is exhausted; andCommentsClose CommentsPermalink





`(2) after complying with paragraph (1), apply the payment in the most effective way to minimize the imposition of any finance charge to the account.CommentsClose CommentsPermalink





`(c) Changes by Card Issuer- If a card issuer makes a material change in the mailing address, office, or procedures for handling cardholder payments, and such change causes a material delay in the crediting of a cardholder payment made during the 60-day period following the date on which such change took effect, the card issuer may not impose any late fee or finance charge for a late payment on the credit card account to which such payment was credited.'.CommentsClose CommentsPermalink

SEC. 4. STOP DECEPTIVE DISCLOSURE.

Section 127(e) of the Truth in Lending Act (15 U.S.C. 1637(e)) is amended by adding at the end the following:CommentsClose CommentsPermalink





`(3) INTEREST RATE LINKED TO PRIME RATE- If a credit card solicitation, application, agreement, or plan specifies use of a variable interest rate established by reference to a `prime rate', `prime interest rate', or similar rate or index, the referenced rate shall be disclosed and defined as the bank prime loan rate posted by a majority of the top 25 (by assets in domestic offices) United States chartered commercial banks, as published by the Board of Governors of the Federal Reserve System. To avoid an unfair or deceptive act or practice, a card issuer may not use the term `prime rate' to refer to any other type of interest rate.'.CommentsClose CommentsPermalink

SEC. 5. DEFINITIONS.

Section 103 of the Truth in Lending Act (15 U.S.C. 1602) is amended by adding at the end the following:CommentsClose CommentsPermalink





`(cc) Primary Federal Regulator-CommentsClose CommentsPermalink





`(1) IN GENERAL- The term `primary Federal regulator', when used with respect to a card issuer that is a depository institution, has the same meaning as the term `appropriate Federal banking agency', under section 3 of the Federal Deposit Insurance Act.CommentsClose CommentsPermalink





`(2) AREAS OF RESPONSIBILITY- For each card issuer within its regulatory jurisdiction, the primary Federal regulator shall be responsible for overseeing the credit card operations of the card issuer, ensuring compliance with the requirements of this title, and enforcing the prohibition against unfair or deceptive acts or practices.'.CommentsClose CommentsPermalink

SEC. 6. STRENGTHEN CREDIT CARD INFORMATION COLLECTION.

Section 136(b) of the Truth in Lending Act (15 U.S.C. 1646(b)) is amended--CommentsClose CommentsPermalink





(1) in paragraph (1)--CommentsClose CommentsPermalink





(A) by striking `The Board shall' and inserting the following:CommentsClose CommentsPermalink





`(A) IN GENERAL- The Board shall'; andCommentsClose CommentsPermalink





(B) by adding at the end the following:CommentsClose CommentsPermalink





`(B) INFORMATION TO BE INCLUDED- The information under subparagraph (A) shall include, as of a date designated by the Board--CommentsClose CommentsPermalink





`(i) a list of each type of transaction or event for which one or more of the card issuers has imposed a separate interest rate upon a cardholder, including purchases, cash advances, and balance transfers;CommentsClose CommentsPermalink





`(ii) for each type of transaction or event identified under clause (i)--CommentsClose CommentsPermalink





`(I) each distinct interest rate charged by the card issuer to a cardholder, as of the designated date; andCommentsClose CommentsPermalink





`(II) the number of cardholders to whom each such interest rate was applied during the calendar month immediately preceding the designated date, and the total amount of interest charged to such cardholders at each such rate during such month;CommentsClose CommentsPermalink





`(iii) a list of each type of fee that one or more of the card issuers has imposed upon a cardholder as of the designated date, including any fee imposed for obtaining a cash advance, making a late payment, exceeding the credit limit on an account, making a balance transfer, or exchanging United States dollars for foreign currency;CommentsClose CommentsPermalink





`(iv) for each type of fee identified under clause (iii), the number of cardholders upon whom the fee was imposed during the calendar month immediately preceding the designated date, and the total amount of fees imposed upon cardholders during such month;CommentsClose CommentsPermalink





`(v) the total number of cardholders that incurred any interest charge or any fee during the calendar month immediately preceding the designated date; andCommentsClose CommentsPermalink





`(vi) any other information related to interest rates, fees, or other charges that the Board deems of interest.'; andCommentsClose CommentsPermalink





(2) by adding at the end the following:CommentsClose CommentsPermalink





`(5) REPORT TO CONGRESS- The Board shall, on an annual basis, transmit to Congress and make public a report containing an assessment by the Board of the profitability of credit card operations of depository institutions. Such report shall include estimates by the Board of the approximate, relative percentage of income derived by such operations from--CommentsClose CommentsPermalink





`(A) the imposition of interest rates on cardholders, including separate estimates for--CommentsClose CommentsPermalink





`(i) interest with an annual percentage rate of less than 25 percent; andCommentsClose CommentsPermalink





`(ii) interest with an annual percentage rate equal to or greater than 25 percent;CommentsClose CommentsPermalink





`(B) the imposition of fees on cardholders;CommentsClose CommentsPermalink





`(C) the imposition of fees on merchants; andCommentsClose CommentsPermalink





`(D) any other material source of income, while specifying the nature of that income.'.CommentsClose CommentsPermalink

SEC. 7. CONFORMING AMENDMENT.

Section 8 of the Fair Credit and Charge Card Disclosure Act of 1988 (15 U.S.C. 1637 note) is repealed.CommentsClose CommentsPermalink

SEC. 8. EFFECTIVE DATE.

This Act and the amendments made by this Act shall become effective 180 days after the date of enactment of this Act.CommentsClose CommentsPermalink