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S 414 ISRSCommentsClose CommentsPermalink

111th CONGRESSCommentsClose CommentsPermalink

1st SessionCommentsClose CommentsPermalink

S. 414CommentsClose CommentsPermalink

To amend the Consumer Credit Protection Act, to ban abusive credit practices, enhance consumer disclosures, protect underage consumers, and for other purposes.CommentsClose CommentsPermalink

IN THE SENATE OF THE UNITED STATESCommentsClose CommentsPermalink

February 11, 2009CommentsClose CommentsPermalink

Mr. DODD (for himself, Mr. LEVIN, Mr. MENENDEZ, Mr. REED, Mr. AKAKA, Mr. SCHUMER, Mr. TESTER, Mr. BROWN, Mr. MERKLEY, Mr. KERRY, Mr. LEAHY, Mr. DURBIN, Mr. HARKIN, Mrs. MCCASKILL, Mr. WHITEHOUSE, and Mr. CASEYMr. CASEY, Mr. KOHL, Mr. SANDERS, Mr. LAUTENBERG, Mr. UDALL of Colorado, Mr. BEGICH, and Mrs. GILLIBRAND) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban AffairsCommentsClose CommentsPermalink

A BILLCommentsClose CommentsPermalink

To amend the Consumer Credit Protection Act, to ban abusive credit practices, enhance consumer disclosures, protect underage consumers, 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; TABLE OF CONTENTS.

(a) Short Title- This Act may be cited as the ‘Credit Card Accountability Responsibility and Disclosure Act of 2009’ or the ‘Credit CARD Act of 2009’. CommentsClose CommentsPermalink





(b) Table of Contents- The table of contents for this Act is as follows: CommentsClose CommentsPermalink





Sec. 1. Short title; table of contents. CommentsClose CommentsPermalink





Sec. 2. Regulatory authority. CommentsClose CommentsPermalink





Sec. 3. Effective date. CommentsClose CommentsPermalink

TITLE I--CONSUMER PROTECTION

Sec. 101. Prior notice of rate increases required. CommentsClose CommentsPermalink





Sec. 102. Freeze on interest rate terms and fees on canceled cards. CommentsClose CommentsPermalink





Sec. 103. Limits on fees and interest charges. CommentsClose CommentsPermalink





Sec. 104. Consumer right to reject card before notice is provided of open account. CommentsClose CommentsPermalink





Sec. 105. Use of terms clarified. CommentsClose CommentsPermalink





Sec. 106. Application of card payments. CommentsClose CommentsPermalink





Sec. 107. Length of billing period. CommentsClose CommentsPermalink





Sec. 108. Prohibition on universal default and unilateral changes to cardholder agreements. CommentsClose CommentsPermalink





Sec. 109. Enhanced penalties. CommentsClose CommentsPermalink





Sec. 110. Enhanced oversight. CommentsClose CommentsPermalink





Sec. 111. Clerical amendments. CommentsClose CommentsPermalink

TITLE II--ENHANCED CONSUMER DISCLOSURES

Sec. 201. Payoff timing disclosures. CommentsClose CommentsPermalink





Sec. 202. Requirements relating to late payment deadlines and penalties. CommentsClose CommentsPermalink





Sec. 203. Renewal disclosures. CommentsClose CommentsPermalink

TITLE III--PROTECTION OF YOUNG CONSUMERS

Sec. 301. Extensions of credit to underage consumers. CommentsClose CommentsPermalink





Sec. 302. Restrictions on certain affinity cards. CommentsClose CommentsPermalink





Sec. 303. Protection of young consumers from prescreened credit offers. CommentsClose CommentsPermalink





Sec. 304. Issuance of credit cards to certain college students. CommentsClose CommentsPermalink

TITLE IV--FEDERAL AGENCY COORDINATION

Sec. 401. Inclusion of all Federal banking agencies. CommentsClose CommentsPermalink

TITLE V--GIFT CARDS

TITLE VI--MISCELLANEOUS PROVISIONS

Sec. 5601. Study and report. CommentsClose CommentsPermalink





Sec. 5602. Credit Card Safety Rating System Commission Study. CommentsClose CommentsPermalink





Sec. 603. Increased borrowing authority of the FDIC and the NCUA. CommentsClose CommentsPermalink

SEC. 2. REGULATORY AUTHORITY.

The Board of Governors of the Federal Reserve System (in this Act referred to as the ‘Board’) may issue such rules and publish such model forms as it considers necessary to carry out this Act and the amendments made by this Act. CommentsClose CommentsPermalink

TITLE I--CONSUMER PROTECTION CommentsClose CommentsPermalink

SEC. 101. PRIOR NOTICE OF RATE INCREASES REQUIRED.

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





‘(i) Advance Notice of Increase in Interest Rate Required- CommentsClose CommentsPermalink





‘(1) IN GENERAL- In the case of any credit card account under an open end consumer credit plan, no increase in any annual percentage rate (other than an increase due to the expiration of any introductory percentage rate, or due solely to a change in another rate of interest to which such rate is indexed)-- CommentsClose CommentsPermalink





‘(A) may take effect before the beginning of the billing cycle which begins not earlier than 45 days after the date on which the obligor receives notice of such increase; or CommentsClose CommentsPermalink





‘(B) may apply to any outstanding balance of credit under such plan, as of the effective date of the increase required under subparagraph (A). CommentsClose CommentsPermalink





‘(2) NOTICE OF RIGHT TO CANCEL- The notice referred to in paragraph (1) shall be made in a clear and conspicuous manner, and shall contain a brief statement of the right of the obligor to cancel the account before the effective date of the increase.’. CommentsClose CommentsPermalink

SEC. 102. 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 adding at the end the following: CommentsClose CommentsPermalink





‘(j) Freeze on Interest Rate Terms and Fees on Canceled Cards- CommentsClose CommentsPermalink





‘(1) IN GENERAL- If an obligor under an open end consumer credit plan closes or cancels a credit card account, the repayment of the outstanding balance after the cancellation shall be subject to all terms and conditions in effect for the obligor immediately before the card was closed or cancelled, including the annual percentage rate and the minimum payment terms in effect immediately prior to such closure or cancellation. CommentsClose CommentsPermalink





‘(2) RULE OF CONSTRUCTION- Closure or cancellation of an account by the obligor shall not constitute a default under an existing cardholder agreement, and shall not trigger an obligation to immediately repay the obligation in full.’. CommentsClose CommentsPermalink

SEC. 103. LIMITS ON FEES AND INTEREST CHARGES.

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





‘(k) Prohibition on Penalties for On-Time Payments- 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





‘(l) Opt-Out of Creditor Authorization of Over-the-Limit Transactions if Fees Are Imposed- CommentsClose CommentsPermalink





‘(1) IN GENERAL- In the case of any credit card account under an open end consumer credit plan under which an over-the-limit-fee may be imposed by the creditor for any extension of credit in excess of the amount of credit authorized to be extended under such account, the consumer may elect to prohibit the creditor from completing any over-the-limit transaction that will result in a fee or constitute a default under the credit agreement, by notifying the creditor of such election in accordance with paragraph (2). CommentsClose CommentsPermalink





‘(2) NOTIFICATION BY CONSUMER- A consumer shall notify a creditor under paragraph (1)-- CommentsClose CommentsPermalink





‘(A) through the notification system maintained by the creditor under paragraph (4); or CommentsClose CommentsPermalink





‘(B) by submitting to the creditor a signed notice of election, by mail or electronic communication, on a form issued by the creditor for purposes of this subparagraph. CommentsClose CommentsPermalink





‘(3) EFFECTIVENESS OF ELECTION- An election by a consumer under paragraph (1) shall be effective beginning 3 business days after the date on which the consumer notifies the creditor in accordance with paragraph (2), and shall remain effective until the consumer revokes the election. CommentsClose CommentsPermalink





‘(4) NOTIFICATION SYSTEM- Each creditor that maintains credit card accounts under an open end consumer credit plan shall establish and maintain a notification system, including a toll-free telephone number, Internet address, and Worldwide website, which permits any consumer whose credit card account is maintained by the creditor to notify the creditor of an election under this subsection, in accordance with paragraph (2). CommentsClose CommentsPermalink





‘(5) ANNUAL NOTICE TO CONSUMERS OF AVAILABILITY OF ELECTION- In the case of any credit card account under an open end consumer credit plan, the creditor shall include a notice, in clear and conspicuous language, of the availability of an election by the consumer under this paragraph as a means of avoiding over-the-limit fees and a higher amount of indebtedness, and the method for providing such election-- CommentsClose CommentsPermalink





‘(A) in the periodic statement required under subsection (b) with respect to such account at least once each calendar year; and CommentsClose CommentsPermalink





‘(B) in any such periodic statement which includes a notice of the imposition of an over-the-limit fee during the period covered by the statement. CommentsClose CommentsPermalink





‘(6) NO FEES IF CONSUMER HAS MADE AN ELECTION- If a consumer has made an election under paragraph (1), no over-the-limit fee may be imposed on the account for any reason that has caused the outstanding balance in the account to exceed the credit limit. CommentsClose CommentsPermalink





‘(m) 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 subsection (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 fee or interest charge; and CommentsClose 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 may not 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





‘(n) 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





‘(o) Limits on Certain 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 FEES FOR VIOLATIONS- The amount of any fee or charge that a card issuer may impose in connection with any omission with respect to, or violation of, the cardholder agreement, including any late payment fee, over the limit fee, increase in the applicable annual percentage rate, or any similar fee or charge, shall be reasonably related to the cost to the card issuer of such omission or violation. CommentsClose CommentsPermalink





‘(3) 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 costs incurred by the creditor to perform such currency exchange; CommentsClose CommentsPermalink





‘(B) the creditor discloses publicly its method for calculating such fee; and CommentsClose CommentsPermalink





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

SEC. 104. CONSUMER RIGHT TO REJECT CARD BEFORE NOTICE IS PROVIDED OF OPEN ACCOUNT.

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





‘(p) Consumer Right To Reject Card Before Notice of New Account Is Provided to Consumer Reporting Agency- A creditor may not furnish any information to a consumer reporting agency (as defined in section 603) concerning a newly opened credit card account under an open end consumer credit plan until the credit card has been used or activated by the consumer.’. CommentsClose CommentsPermalink

SEC. 105. USE OF TERMS CLARIFIED.

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





‘(q) Use of Terms- The following requirements shall apply with respect to the terms of any credit card account under any open end consumer credit plan: CommentsClose CommentsPermalink





‘(1) FIXED RATE- The term ‘fixed’, when appearing in conjunction with a reference to the annual percentage rate or interest rate applicable with respect to such account, may only be used to refer to an annual percentage rate or interest rate that will not change or vary for any reason over the period specified clearly and conspicuously in the terms of the account. CommentsClose CommentsPermalink





‘(2) PRIME RATE- The term ‘prime rate’, when appearing in any agreement or contract for any such account, may only be used to refer to the bank prime rate published in the Federal Reserve Statistical Release on selected interest rates (daily or weekly), and commonly referred to as the ‘H.15 release’ (or any successor publication).’. CommentsClose CommentsPermalink

SEC. 106. 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’; CommentsClose CommentsPermalink





(2) by inserting ‘, by 5:00 p.m. on the date on which such payment is due,’ after ‘in readily identifiable form’; CommentsClose CommentsPermalink





(3) by striking ‘manner, location, and time’ and inserting ‘manner, and location’; and CommentsClose CommentsPermalink





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





‘(b) Application of Payments- 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; and CommentsClose CommentsPermalink





‘(2) after complying with paragraph (1), apply the payment in a way that minimizes the amount 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





‘(d) Presumption of Timely Payment- Any evidence provided by a consumer in the form of a receipt from the United States Postal Service or other common carrier indicating that a payment on a credit card account was sent to the card issuer not less than 7 days before the due date contained in the periodic statement for such payment shall create a presumption that such payment was made by the due date, which may be rebutted by the creditor for fraud or dishonesty on the part of the consumer with respect to the mailing date.’. CommentsClose CommentsPermalink

SEC. 107. LENGTH OF BILLING PERIOD.

Section 163(a) of the Truth in Lending Act (15 U.S.C. 16686b(a)) is amended by striking ‘mailed at least fourteen days prior’ and inserting ‘mailed at least 21 days prior’. CommentsClose CommentsPermalink

SEC. 108. PROHIBITION ON UNIVERSAL DEFAULT AND UNILATERAL CHANGES TO CARDHOLDER AGREEMENTS.

(a) In General- Chapter 4 of the Truth in Lending Act (15 U.S.C. 1666 et seq.) is amended-- CommentsClose CommentsPermalink





(1) by redesignating section 171 as section 173; and CommentsClose CommentsPermalink





(2) by inserting after section 170 the following: CommentsClose CommentsPermalink

‘SEC. 171. LIMITS ON INTEREST RATE INCREASES.

‘(a) In General- No card issuer may increase any annual percentage rate, fee, or finance charge applicable to a credit card account under an open end consumer credit plan, or terminate early a lower introductory rate, fee, or charge, except as permitted under this section. CommentsClose CommentsPermalink





‘(b) Exceptions- The limitation under subsection (a) shall not apply to-- CommentsClose CommentsPermalink





‘(1) an increase due to the scheduled expiration of an introductory term; CommentsClose CommentsPermalink





‘(2) an increase in a variable annual percentage rate, fee, or finance charge in accordance with a credit card agreement that provides for changes according to an index or formula; CommentsClose CommentsPermalink





‘(3) an increase due to a specific, material action or omission of a consumer in violation of an agreement that is directly related to such account and that is specified in the contract or agreement as grounds for an increase, except that-- CommentsClose CommentsPermalink





‘(A) the creditor may not take into account information not directly related to the account, including adverse information concerning the consumer, information in any consumer report, or changes in the credit score of the consumer; and CommentsClose CommentsPermalink





‘(B) an increase described in this paragraph shall terminate not later than 6 months after the date on which it is imposed, if the consumer commits no further violations; CommentsClose CommentsPermalink





or‘(4) a change that takes effect upon renewal of the card in accordance with section 172; or CommentsClose CommentsPermalink





‘(5) an increase allowing a decreased rate to be returned to the pre-existing rate, if the consumer fails to abide by the conditions of a workout arrangement with the creditor, pursuant to the rules of the Board. CommentsClose CommentsPermalink





‘(c) Map to Lower Rate- CommentsClose CommentsPermalink





‘(1) IN GENERAL- A card issuer that increases an annual percentage rate, fee, or finance charge pursuant to subsection (b)(3) shall include, together with the notice of such increase under section 127(i), a statement, provided in a clear and conspicuous manner-- CommentsClose CommentsPermalink





‘(A) of the discrete, specific action or omission of the consumer on which the increase was based; and CommentsClose CommentsPermalink





‘(B) that the increase will terminate in 6 months if the consumer does not commit further violations. CommentsClose CommentsPermalink





‘(2) BOARD AUTHORITY- The Board may, by rule, provide for exceptions to the requirements of subsection (b)(3)(B), if the Board determines that there are other appropriate factors that creditors may consider in determining the appropriate annual percentage rate for particular consumers. CommentsClose CommentsPermalink

‘SEC. 172. UNILATERAL CHANGES IN CREDIT CARD AGREEMENT PROHIBITED.

‘A card issuer may not amend or change the terms of a credit card contract or agreement under an open end consumer credit plan, until after the date on which the credit card will expire if not renewed.’. CommentsClose CommentsPermalink





(b) Clerical Amendment- The table of sections for chapter 4 of the Truth in Lending Act is amended by striking the item relating to section 171 and inserting the following: CommentsClose CommentsPermalink





‘171. Universal defaults prohibited. CommentsClose CommentsPermalink





‘172. Unilateral changes in credit card agreement prohibited. CommentsClose CommentsPermalink





‘173. Applicability of State laws.’. CommentsClose CommentsPermalink

SEC. 109. ENHANCED PENALTIES.

Section 130(a)(2)(A) of the Truth in Lending Act (15 U.S.C. 1640(a)(2)(A)) is amended by striking ‘or (iii) in the’ and inserting the following: ‘(iii) in the case of an individual action relating to an open end consumer credit plan that is not secured by real property or a dwelling, twice the amount of any finance charge in connection with the transaction, with a minimum of $500 and a maximum of $5,000, or such higher amount as may be appropriate in the case of an established pattern or practice of such failures; or (iv) in the’. CommentsClose CommentsPermalink

SEC. 110. ENHANCED OVERSIGHT.

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





‘(r) Evaluation of Credit Card Policies and Procedures- CommentsClose CommentsPermalink





‘(1) IN GENERAL- In connection with its examination of a credit card issuer under its supervision, each agency referred to in paragraphs (1), (2), and (3) of section 108(a) shall conduct, as appropriate, an evaluation of the credit card policies and procedures used by such card issuer to ensure compliance with this section and sections 163, 164, 171, and 172. Such agency shall promptly require the card issuer to take any corrective action needed to address any violations of any such section. CommentsClose CommentsPermalink





‘(2) ANNUAL REPORTS TO CONGRESS- Each year, each agency referred to in subsections (a) and (c) of section 108 shall submit a report to Congress concerning the administration of its functions under this section, including such recommendations as the agency deems necessary or appropriate. Each such report shall include an assessment of the extent to which compliance with the requirements of this section is being achieved and a summary of the enforcement actions taken by the agency assigned administrative enforcement responsibilities under subsections (a) and (c) of section 108.’. CommentsClose CommentsPermalink





(b) Strengthened 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’; and CommentsClose 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; CommentsClose 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) the number of cardholders who are paying the stated default annual percentage rate applicable in cases in which the account is past due or the account holder is otherwise in violation of the terms of the account agreement; and CommentsClose CommentsPermalink





‘(IV) the number of cardholders who are paying above such stated default annual percentage rate; 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; and CommentsClose CommentsPermalink





‘(vi) any other information related to interest rates, fees, or other charges that the Board deems of interest.’; and CommentsClose 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; and CommentsClose 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; and CommentsClose CommentsPermalink





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

SEC. 111. CLERICAL AMENDMENTS.

Section 103(i) of the Truth in Lending Act (15 U.S.C. 1602(i)) is amended-- CommentsClose CommentsPermalink





(1) by striking ‘term’ and all that follows through ‘means’ and inserting the following: ‘terms ‘open end credit plan’ and ‘open end consumer credit plan’ mean’; and CommentsClose CommentsPermalink





(2) in the second sentence, by inserting ‘or open end consumer credit plan’ after ‘credit plan’ each place that term appears. CommentsClose CommentsPermalink

TITLE II--ENHANCED CONSUMER DISCLOSURES CommentsClose CommentsPermalink

SEC. 201. PAYOFF TIMING DISCLOSURES.

(a) In General- Section 127(b)(11) of the Truth in Lending Act (15 U.S.C. 1637(b)(11)) is amended to read as follows: CommentsClose CommentsPermalink





‘(11)(A) A written statement in the following form: ‘Minimum Payment Warning: Making only the minimum payment will increase the interest rateamount of interest you pay and the time it takes to repay your balance.’. CommentsClose CommentsPermalink





‘(B) Repayment information that would apply to the outstanding balance of the consumer under the credit plan, including-- CommentsClose CommentsPermalink





‘(i) the number of months (rounded to the nearest month) that it would take to pay the entire amount of that balance, if the consumer pays only the required minimum monthly payments and if no further advances are made; CommentsClose CommentsPermalink





‘(ii) the total cost to the consumer, including interest and principal payments, of paying that balance in full, if the consumer pays only the required minimum monthly payments and if no further advances are made; CommentsClose CommentsPermalink





and‘(iii) the monthly payment amount that ‘(iii) the monthly payment amount that would be required for the consumer to eliminate the outstanding balance in 36 months, if no further advances are made, and the total cost to the consumer, including interest and principal payments, of paying that balance in full if the consumer pays the balance over 36 months; and CommentsClose CommentsPermalink





‘(iv) a toll-free telephone number at which the consumer may receive information about accessing credit counseling and debt management services. CommentsClose CommentsPermalink





‘(C)(i) Subject to clause (ii), in making the disclosures under subparagraph (B), the creditor shall apply the interest rate or rates in effect on the date on which the disclosure is made until the date on which the balance would be paid in full. CommentsClose CommentsPermalink





‘(ii) If the interest rate in effect on the date on which the disclosure is made is a temporary rate that will change under a contractual provision applying an index or formula for subsequent interest rate adjustment, the creditor shall apply the interest rate in effect on the date on which the disclosure is made for as long as that interest rate will apply under that contractual provision, and then apply an interest rate based on the index or formula in effect on the applicable billing date. CommentsClose CommentsPermalink





‘(D) All of the information described in subparagraph (B) shall-- CommentsClose CommentsPermalink





‘(i) be disclosed in the form and manner which the Board shall prescribe, by regulation, and in a manner that avoids duplication; and CommentsClose CommentsPermalink





‘(ii) be placed in a conspicuous and prominent location on the billing statement, in typeface that is at least as large as the largest type on the statement. CommentsClose CommentsPermalink





‘(E) In the regulations prescribed under subparagraph (D), the Board shall require that the disclosure of such information shall be in the form of a table that-- CommentsClose CommentsPermalink





‘(i) contains clear and concise headings for each item of such information; and CommentsClose CommentsPermalink





‘(ii) provides a clear and concise form stating each item of information required to be disclosed under each such heading. CommentsClose CommentsPermalink





‘(F) In prescribing the form of the table under subparagraph (E), the Board shall require that-- CommentsClose CommentsPermalink





‘(i) all of the information in the table, and not just a reference to the table, be placed on the billing statement, as required by this paragraph; and CommentsClose CommentsPermalink





‘(ii) the items required to be included in the table shall be listed in the order in which such items are set forth in subparagraph (B). CommentsClose CommentsPermalink





‘(G) In prescribing the form of the table under subparagraph (D), the Board shall employ terminology which is different than the terminology which is employed in subparagraph (B), if such terminology is more easily understood and conveys substantially the same meaning.’. CommentsClose CommentsPermalink





(b) Civil Liability- Section 130(a) of the Truth in Lending Act (15 U.S.C. 1640(a)) is amended, in the undesignated paragraph following paragraph (4), by striking the second sentence and inserting the following: ‘In connection with the disclosures referred to in subsections (a) and (b) of section 127, a creditor shall have a liability determined under paragraph (2) only for failing to comply with the requirements of section 125, 127(a), or any of paragraphs (4) through (13) of section 127(b), or for failing to comply with disclosure requirements under State law for any term or item that the Board has determined to be substantially the same in meaning under section 111(a)(2) as any of the terms or items referred to in section 127(a), or any of paragraphs (4) through (13) of section 127(b).’. CommentsClose CommentsPermalink





(c) Guidelines Required- CommentsClose CommentsPermalink





(1) IN GENERAL- Not later than 1 year after the date of enactment of this Act, the Secretary of the Treasury (in this section referred to as the ‘Secretary’) through the Office of Finance Education, in consultation with the Board of Governors of the Federal Reserve the System (in this section referred to as the ‘Board’), shall, by rule, regulation, or order, issue guidelines for the establishment and maintenance by creditors of a toll-free telephone number for purposes of the disclosures required under section 127(b)(11)(B)(iv) of the Truth in Lending Act, as added by this section. CommentsClose CommentsPermalink





(2) APPROVED AGENCIES- Guidelines issued under this subsection shall ensure that referrals provided by the toll-free number referred to in paragraph (1) include only those agencies certified by the Secretary as meeting the criteria under this section. CommentsClose CommentsPermalink





(3) CRITERIA- The Secretary shall only certify a nonprofit budget and credit counseling agency for purposes of this subsection that-- CommentsClose CommentsPermalink





(A) demonstrates that it will provide qualified counselors, maintain adequate provision for safekeeping and payment of client funds, provide adequate counseling with respect to client credit problems, and deal responsibly and effectively with other matters relating to the quality, effectiveness, and financial security of the services it provides; and CommentsClose CommentsPermalink





(B) at a minimum-- CommentsClose CommentsPermalink





(i) is registered as a nonprofit entity under section 501(c) of the Internal Revenue Code of 1986; CommentsClose CommentsPermalink





(ii) has a board of directors, the majority of the members of which-- CommentsClose CommentsPermalink





(I) are not employed by such agency; and CommentsClose CommentsPermalink





(II) will not directly or indirectly benefit financially from the outcome of the counseling services provided by such agency; CommentsClose CommentsPermalink





(iii) if a fee is charged for counseling services, charges a reasonable and fair fee, and provides services without regard to ability to pay the fee; CommentsClose CommentsPermalink





(iv) provides for safekeeping and payment of client funds, including an annual audit of the trust accounts and appropriate employee bonding; CommentsClose CommentsPermalink





(v) provides full disclosures to clients, including funding sources, counselor qualifications, possible impact on credit reports, any costs of such program that will be paid by the client, and how such costs will be paid; CommentsClose CommentsPermalink





(vi) provides adequate counseling with respect to the credit problems of the client, including an analysis of the current financial condition of the client, factors that caused such financial condition, and how such client can develop a plan to respond to the problems without incurring negative amortization of debt; CommentsClose CommentsPermalink





(vii) provides trained counselors who-- CommentsClose CommentsPermalink





(I) receive no commissions or bonuses based on the outcome of the counseling services provided; CommentsClose CommentsPermalink





(II) have adequate experience; and CommentsClose CommentsPermalink





(III) have been adequately trained to provide counseling services to individuals in financial difficulty, including the matters described in clause (vi); CommentsClose CommentsPermalink





(viii) demonstrates adequate experience and background in providing credit counseling; CommentsClose CommentsPermalink





(ix) has adequate financial resources to provide continuing support services for budgeting plans over the life of any repayment plan; and CommentsClose CommentsPermalink





(x) is accredited by an independent, nationally recognized accrediting organization. CommentsClose CommentsPermalink

SEC. 202. REQUIREMENTS RELATING TO LATE PAYMENT DEADLINES AND PENALTIES.

Section 127(b)(12) of the Truth in Lending Act (15 U.S.C. 1637(b)(12)) is amended to read as follows: CommentsClose CommentsPermalink





‘(12) REQUIREMENTS RELATING TO LATE PAYMENT DEADLINES AND PENALTIES- CommentsClose CommentsPermalink





‘(A) LATE PAYMENT DEADLINE AND POSTMARK DATE REQUIRED TO BE DISCLOSED- In the case of a credit card account under an open end consumer credit plan under which a late fee or charge may be imposed due to the failure of the obligor to make payment on or before the due date for such payment, the periodic statement required under subsection (b) with respect to the account shall include, in a conspicuous location on the billing statement-- CommentsClose CommentsPermalink





‘(i) the date on which the payment is due or, if different, the date on which a late payment fee will be charged, together with the amount of the fee or charge to be imposed if payment is made after that date; and CommentsClose CommentsPermalink





‘(ii) the date by which the payment must be postmarked, if paid by mail, in order to avoid the imposition of a late payment fee with respect to the payment, and a statement to that effect. CommentsClose CommentsPermalink





‘(B) DISCLOSURE OF INCREASE IN INTEREST RATES FOR LATE PAYMENTS- If 1 or more late payments under an open end consumer credit plan may result in an increase in the annual percentage rate applicable to the account, the statement required under subsection (b) with respect to the account shall include conspicuous notice of such fact, together with the applicable penalty annual percentage rate, in close proximity to the disclosure required under subparagraph (A) of the date on which payment is due under the terms of the account. CommentsClose CommentsPermalink





‘(C) REQUIREMENTS RELATING TO POSTMARK DATE- CommentsClose CommentsPermalink





‘(i) IN GENERAL- The date included in a periodic statement pursuant to subparagraph (A)(ii) with regard to the postmark on a payment shall allow, in accordance with regulations prescribed by the Board under clause (ii), a reasonable time for the consumer to make the payment and a reasonable time for the delivery of the payment by the due date. CommentsClose CommentsPermalink





‘(ii) BOARD REGULATIONS- The Board shall prescribe guidelines for determining a reasonable period of time for making a payment and delivery of a payment for purposes of clause (i), after consultation with the Postmaster General of the United States and representatives of consumer and trade organizations. CommentsClose CommentsPermalink





‘(D) PAYMENTS AT LOCAL BRANCHES- If the creditor, in the case of a credit card account referred to in subparagraph (A), is a financial institution which maintains branches or offices at which payments on any such account are accepted from the obligor in person, the date on which the obligor makes a payment on the account at such branch or office shall be considered to be the date on which the payment is made for purposes of determining whether a late fee or charge may be imposed due to the failure of the obligor to make payment on or before the due date for such payment.’. CommentsClose CommentsPermalink

SEC. 203. RENEWAL DISCLOSURES.

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





(1) by striking paragraph (2); CommentsClose CommentsPermalink





(2) by redesignating paragraph (3) as paragraph (2); and CommentsClose CommentsPermalink





(3) in paragraph (1), by striking ‘Except as provided in paragraph (2), a card issuer’ and inserting the following: ‘A card issuer that has changed or amended any term of the account since the last renewal or’. CommentsClose CommentsPermalink

TITLE III--PROTECTION OF YOUNG CONSUMERS CommentsClose CommentsPermalink

SEC. 301. EXTENSIONS OF CREDIT TO UNDERAGE CONSUMERS.

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





‘(8) APPLICATIONS FROM UNDERAGE CONSUMERS- CommentsClose CommentsPermalink





‘(A) PROHIBITION ON ISSUANCE- No credit card may be issued to, or open end consumer credit plan established by or on behalf of, a consumer who has not attained the age of 21, unless the consumer has submitted a written application to the card issuer that meets the requirements of subparagraph (B). CommentsClose CommentsPermalink





‘(B) APPLICATION REQUIREMENTS- An application to open a credit card account by an individual consumer who has not attained the age of 21 as of the date of submission of the application shall require-- CommentsClose CommentsPermalink





‘(i) the signature of the parent, legal guardian, spouse, or any other individual over the age of 21 having a means to repay debts incurred by the consumer in connection with the account, indicating joint liability for debts incurred by the consumer in connection with the account before the consumer has attained the age of 21; CommentsClose CommentsPermalink





‘(ii) submission by the consumer of financial information indicating an independent means of repaying any obligation arising from the proposed extension of credit in connection with the account; or CommentsClose CommentsPermalink





‘(iii) completion of a certified financial literacy or financial education course designed for young consumers. CommentsClose CommentsPermalink





‘(C) CERTIFIED FINANCIAL LITERACY OR EDUCATION COURSES FOR YOUNG CONSUMERS- CommentsClose CommentsPermalink





‘(i) IN GENERAL- The Secretary of the Treasury, acting through the Office of Financial Literacy and Education (in this subparagraph referred to as ‘OFE’), shall make and publish a list of all courses and programs that have been certified for financial literacy or financial education purposes appropriate for young consumers. When developing the certification criteria the OFE shall take into account the course or program’s-- CommentsClose CommentsPermalink





‘(I) proven track record in producing changed consumer behavior; and CommentsClose CommentsPermalink





‘(II) use of practices or curricula that have been shown to change consumer behavior. CommentsClose CommentsPermalink





‘(ii) EXPLICIT ELIGIBILITY- Courses taken that are offered or required by colleges, universities, and high schools may be certified by the OFE for purposes of this subparagraph, as well as other programs and courses. The OFE shall make an effort to provide certification to all types of programs and courses, including those that are conducted by nonprofit, faith-based, or for-profit institutions and State and local governments. CommentsClose CommentsPermalink





‘(iii) SELECT PROGRAMS- From among those courses or programs that are certified by the OFE under this subparagraph, the OFE may designate a select number of programs or courses that produce results that are far better than those produced by other certified programs as ‘highly certified’.’. CommentsClose CommentsPermalink

SEC. 302. RESTRICTIONS ON CERTAIN AFFINITY CARDS.

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





‘(s) Restrictions on Issuance of Affinity Cards to Students- No credit card account under an open end consumer credit plan may be established by an individual who has not attained the age of 21 as of the date of submission of the application pursuant to any direct or indirect agreement relating to affinity cards, as defined by the Board, between the creditor and an institution of higher education, as defined in section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a)), unless the requirements of subsection (c)(8) are met with respect to the obligor.’. CommentsClose CommentsPermalink

SEC. 303. PROTECTION OF YOUNG CONSUMERS FROM PRESCREENED CREDIT OFFERS.

(a) In General- Section 604(c)(1)(B) of the Fair Credit Reporting Act (15 U.S.C. 1681b(c)(1)(B)) is amended-- CommentsClose CommentsPermalink





(1) in clause (ii), by striking ‘and’ at the end; and CommentsClose CommentsPermalink





(2) in clause (iii), by striking the period at the end and inserting the following: ‘; and CommentsClose CommentsPermalink





‘(iv) the consumer report indicates that the consumer is age 21 or older, except that a consumer who is at least 18 years of age may elect, in accordance with subsection (e)(7), to authorize the consumer reporting agency to include the name and address of the consumer in any list of names provided by the agency pursuant to this paragraph.’. CommentsClose CommentsPermalink





(b) Opt-In for Young Consumers- Section 604(e) of the Fair Credit Reporting Act (15 U.S.C. 1681b(e)) is amended-- CommentsClose CommentsPermalink





(1) by striking the subsection heading and inserting the following: CommentsClose CommentsPermalink





‘(e) Election of Consumers Regarding Lists- ’; and CommentsClose CommentsPermalink





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





‘(7) OPT-IN FOR UNDERAGE CONSUMERS- CommentsClose CommentsPermalink





‘(A) IN GENERAL- A consumer who is at least 18 years of age, but has not attained his or her 21st birthday, may elect to have the name and address of the consumer included in any list provided by a consumer reporting agency under subsection (c)(1)(B) in connection with a credit or insurance transaction that is not initiated by the consumer by notifying the agency in accordance with subparagraph (B) that the consumer consents to the use of a consumer report relating to the consumer in connection with any credit or insurance transaction that is not initiated by the consumer. CommentsClose CommentsPermalink





‘(B) MANNER OF NOTIFICATION- An election by a consumer described in subparagraph (A) shall be in writing, using a signed notice of election form issued or made available electronically by the consumer reporting agency at the request of the consumer for purposes of this paragraph. CommentsClose CommentsPermalink





‘(C) EFFECTIVENESS OF ELECTION- An election by a consumer under subparagraph (A) to be included in a list provided by a consumer reporting agency-- CommentsClose CommentsPermalink





‘(i) shall be effective until the earlier of-- CommentsClose CommentsPermalink





‘(I) the 21st birthday of the consumer; or CommentsClose CommentsPermalink





‘(II) the date on which the consumer notifies the agency, through the notification system established by the agency under paragraph (5), that the election is no longer effective; and CommentsClose CommentsPermalink





‘(ii) shall be effective with respect to each affiliate of the agency. CommentsClose CommentsPermalink





‘(D) RULE OF CONSTRUCTION- An election by a consumer under subparagraph (A) to be included in a list provided by a consumer reporting agency may not be construed to limit the applicability of this subsection to any person age 21 or older, and the consumer may elect to be excluded from any such list after the attainment of his or her 21st birthday in the manner otherwise provided under this subsection.’. CommentsClose CommentsPermalink

TITLE IV--FEDERAL AGENCY COORDINATION CommentsClose CommentsPermalink

SEC. 401. INCLUSION OF ALL FEDERAL BANKING AGENCIES.

(a) In General- Section 18(f)(1) of the Federal Trade Commission Act (15 U.S.C. 57a(f)(1)) is amended in the second sentence-- CommentsClose CommentsPermalink





(1) by striking ‘The Board of Governors of the Federal Reserve System (with respect to banks) and the Federal Home Loan Bank Board (with respect to savings and loan institutions described in paragraph (3)) and the National Credit Union Administration Board (with respect to Federal credit unions described in paragraph (4))’ and inserting ‘Each appropriate Federal banking agency’; and CommentsClose CommentsPermalink





(2) by inserting ‘in consultation with the Commission’ after ‘shall prescribe regulations’. CommentsClose CommentsPermalink





(b) FTC Concurrent Rulemaking- Section 18(f)(1) of the Federal Trade Commission Act (15 U.S.C. 57a(f)(1)) is amended by inserting after the second sentence the following: ‘Notwithstanding any other provision of this section, whenever such agencies commence such a rulemaking proceeding, the Commission, with respect to the entities within its jurisdiction under this Act, may commence a rulemaking proceeding and prescribe regulations in accordance with section 553 of title 5, United States Code. The Commission, the Federal banking agencies, and the National Credit Union Administration Board shall consult and coordinate with each other so that the regulations prescribed by each such agency are consistent with and comparable to the regulations prescribed by each other such agency, to the extent practicable.’. CommentsClose CommentsPermalink





(c) Preservation of State Law- Section 18(f)(6) of the Federal Trade Commission Act (15 U.S.C. 57a(f)(6)) is amended to read as follows:‘(6) is amended-- CommentsClose CommentsPermalink





(1) by redesignating paragraph (7) as paragraph (8); and CommentsClose CommentsPermalink





(2) by inserting after paragraph (6) the following: CommentsClose CommentsPermalink





‘(7) Notwithstanding any other provision of this subsection or any other provision of law, regulations promulgated under this subsection shall be considered supplemental to State laws governing unfair and deceptive acts and practices, and may not be construed to preempt any provision of State law that provides equal or greater protections.’. CommentsClose CommentsPermalink





(d) GAO Study and Report- Not later than 18 months after the date of enactment of this Act, the Comptroller General of the United States shall transmit to Congress a report on the status of regulations of the Federal banking agencies and the National Credit Union Administration regarding unfair and deceptive acts or practices by depository institutions and Federal credit unions. CommentsClose CommentsPermalink





(e) Technical and Conforming Amendments- Section 18(f) of the Federal Trade Commission Act (15 U.S.C. 57a(f)) is amended-- CommentsClose CommentsPermalink





(1) in the subsection heading, by striking ‘Board’ and all that follows through ‘Administration’ and inserting ‘Appropriate Federal Banking Agencies’;(2) in paragraphparagraph (1), in the first sentence-- CommentsClose CommentsPermalink





(A) by striking ‘banks or savings and loan institutions described in paragraph (3), each agency specified in paragraph (2) or (3) of this subsection shall establish’ and inserting ‘depository institutions or Federal credit unions, each appropriate Federal banking agency shall establish’; and CommentsClose CommentsPermalink





(B) by striking ‘banks or savings and loan institutions described in paragraph (3), subject to its jurisdiction’ and inserting ‘the depository institutions or Federal credit unions subject to the jurisdiction of such appropriate Federal banking agency’; CommentsClose CommentsPermalink





(32) in paragraph (1), in the final sentence-- CommentsClose CommentsPermalink





(A) by striking ‘each such Board’ and inserting ‘each such appropriate Federal banking agency’; CommentsClose CommentsPermalink





(B) by striking ‘banks or savings and loan institutions described in paragraph (3), or Federal credit unions described in paragraph (4), as the case may be,’ each place that term appears and inserting ‘depository institutions or Federal credit unions subject to the jurisdiction of such appropriate Federal banking agency’; CommentsClose CommentsPermalink





(C) by striking ‘(A) any such Board’ and inserting ‘(A) any such appropriate Federal banking agency’; and CommentsClose CommentsPermalink





(D) by striking ‘with respect to banks, savings and loan institutions’ and inserting ‘with respect to depository institutions’; CommentsClose CommentsPermalink





(4) in paragraph3) in paragraph (2), by moving the margins 2 ems to the left; CommentsClose CommentsPermalink





(4) in paragraph (2)(C), by inserting ‘than’ after ‘(other’; CommentsClose CommentsPermalink





(5) in paragraph (3), by inserting ‘by the Director of the Office of Thrift Supervision’ before the period at the end; CommentsClose CommentsPermalink





(6) in paragraph (4), by inserting ‘by the National Credit Union Administration’ before the period at the end; CommentsClose CommentsPermalink





(7) in paragraph (6), by striking ‘the Board of Governors of the Federal Reserve System’ and inserting ‘any Federal banking agency or the National Credit Union Administration Board’; CommentsClose CommentsPermalink





and(8) by adding at the end the following new paragraph:‘(8 (8) by inserting after paragraph (8), as so designated by this section, the following: CommentsClose CommentsPermalink





‘(9) For purposes of this subsection-- CommentsClose CommentsPermalink





‘(A) the term ‘appropriate Federal banking agency’ has the same meaning as in section 3 of the Federal Deposit Insurance Act, and includes the National Credit Union Administration Board with respect to Federal credit unions; CommentsClose CommentsPermalink





‘(B) the terms ‘depository institution’ and ‘Federal banking agency’ have the same meanings as in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813); and CommentsClose CommentsPermalink





‘(C) the term ‘Federal credit union’ has the same meaning as in section 101 of the Federal Credit Union Act (12 U.S.C. 1752).’; and CommentsClose CommentsPermalink





(9) in the undesignated matter at the end, by striking ‘The terms used in this paragraph’ and inserting the following: CommentsClose CommentsPermalink





‘(10) The terms used in this subsection’. CommentsClose CommentsPermalink

TITLE V--GIFT CARDS CommentsClose CommentsPermalink

TITLE VI--MISCELLANEOUS PROVISIONS CommentsClose CommentsPermalink

SEC. 5601. STUDY AND REPORT.

(a) Study Required- The Comptroller General of the United States (in this section referred to as the ‘Comptroller’) shall conduct a study on interchange fees and their effects on consumers and merchants. The Comptroller shall review-- CommentsClose CommentsPermalink





(1) the extent to which interchange fees are required to be disclosed to consumers and merchants, and how such fees are overseen by the Federal banking agencies or other regulators; CommentsClose CommentsPermalink





(2) the ways in which the interchange system affects the ability of merchants of varying size to negotiate pricing with card associations and banks; CommentsClose CommentsPermalink





(3) the costs and factors incorporated into interchange fees, such as advertising, bonus miles, and rewards, how such costs and factors vary among cards; and CommentsClose CommentsPermalink





(4) the consequences of the undisclosed nature of interchange fees on merchants and consumers with regard to prices charged for goods and services. CommentsClose CommentsPermalink





(b) Report Required- Not later than 180 days after the date of enactment of this Act, the Comptroller shall submit a report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives containing a detailed summary of the findings and conclusions of the study required by this section, together with such recommendations for legislative or administrative actions as may be appropriate. CommentsClose CommentsPermalink

SEC. 5602. CREDIT CARD SAFETY RATING SYSTEM COMMISSION STUDY.

(a) Definition- In this section, the term ‘safety’ refers to the amount of risk to cardholders that results from credit card practices and terms in credit card agreements that are either not well understood by consumers, or are not easily understood, or could have an adverse financial effect on consumers, other than interest rates, periodic fees, or rewards. CommentsClose CommentsPermalink





(b) Establishment of Safety Rating System- The Comptroller General of the United States (in this section referred to as the ‘Comptroller’) shall establish an entity to be known as the ‘Credit Card Safety Rating System Commission’ (in this section referred to as the ‘Commission’). CommentsClose CommentsPermalink





(c) Duties- The duties of the Commission shall be-- CommentsClose CommentsPermalink





(1) to determine if a rating system to allow cardholders to quickly assess the level of safety of credit card agreements would be beneficial to consumers; CommentsClose CommentsPermalink





(2) to assess the impact on credit card transparency and consumer safety of various rating system policy options, including-- CommentsClose CommentsPermalink





(A) the use of a 5-star rating system to reflect the relative safety of card terms, marketing and customer service practices, and product features; CommentsClose CommentsPermalink





(B) making the use of the system mandatory for all cards; CommentsClose CommentsPermalink





(C) requiring a graphic display of rating on all marketing material, applications, billing statements, and agreements associated with that credit card, as well as on the back of each such credit card; CommentsClose CommentsPermalink





(D) requiring an annual review of the safety rating system, to determine whether the point system is effectively aiding consumers and encouraging transparent competition and fairness to consumers; and CommentsClose CommentsPermalink





(E) requiring consumer access to ratings through public website and other outreach programs; CommentsClose CommentsPermalink





(3) if it is deemed beneficial, to make recommendations to Congress concerning how such a system should be devised; CommentsClose CommentsPermalink





(4) to study the effects of such system on the availability and affordability of credit and the implications of changes in credit availability and affordability in the United States and in the general market for credit services due to the rating system; and CommentsClose CommentsPermalink





(5) by not later than March 1 of the second year after the date of enactment of this Act, to submit a report to Congress containing detailed results and recommendations, including how to create such system, if creating such system is recommended. CommentsClose CommentsPermalink





(d) Membership- CommentsClose CommentsPermalink





(1) NUMBER AND APPOINTMENT- The Commission shall be composed of 15 members appointed by the Comptroller, in accordance with this section. CommentsClose CommentsPermalink





(2) QUALIFICATIONS- CommentsClose CommentsPermalink





(A) IN GENERAL- The membership of the Commission, subject to subparagraph (B), shall include individuals-- CommentsClose CommentsPermalink





(i) who have achieved national recognition for their expertise in credit cards, debt management, economics, credit availability, consumer protection, and other credit card related issues and fields; and CommentsClose CommentsPermalink





(ii) who provide a mix of different professions, a broad geographic representation, and a balance between urban and rural representatives. CommentsClose CommentsPermalink





(B) MAKEUP OF COMMISSION- The Commission shall be comprised of-- CommentsClose CommentsPermalink





(i) 4 representatives from consumer groups; CommentsClose CommentsPermalink





(ii) 4 representatives from credit card issuers or banks; CommentsClose CommentsPermalink





(iii) 7 representatives from nonprofit research entities or nonpartisan experts in banking and credit cards; and CommentsClose CommentsPermalink





(iv) not fewer than 1 of the members described in clauses (i) through (iii) who represents each of-- CommentsClose CommentsPermalink





(I) the elderly; CommentsClose CommentsPermalink





(II) economically disadvantaged consumers; CommentsClose CommentsPermalink





(III) racial or ethnic minorities; and CommentsClose CommentsPermalink





(IV) students and minors. CommentsClose CommentsPermalink





(C) ETHICS DISCLOSURES- The Comptroller shall establish a system for public disclosure by members of the Commission of financial and other potential conflicts of interest relating to such members. Members of the Commission shall be treated in the same manner as employees of Congress whose pay is disbursed by the Secretary of the Senate for purposes of title I of the Ethics in Government Act of 1978 (Public Law 95-521). CommentsClose CommentsPermalink





(3) CHAIRPERSON; VICE CHAIRPERSON- The Comptroller shall designate a member of the Commission, at the time of appointment of the member, as Chairperson and a member as Vice Chairperson, for that term of appointment, except that in the case of a vacancy in the position of Chairperson or Vice Chairperson of the Commission, the Comptroller may designate another member for the remainder of the term of that member. CommentsClose CommentsPermalink





(4) TERMS- Members of the Commission shall be appointed for the life of the Commission. Any vacancies shall not affect the power and duties of the Commission but shall be filled in the same manner as the original appointment. CommentsClose CommentsPermalink





(5) COMPENSATION- CommentsClose CommentsPermalink





(A) MEMBERS- While serving on the business of the Commission (including travel time), a member of the Commission shall be entitled to compensation at the per diem equivalent of the rate provided for level IV of the Executive Schedule undersection 5315 of title 5, United States Code, and while so serving away from home and the regular place of business of the member, the member may be allowed travel expenses, as authorized by the Chairperson. CommentsClose CommentsPermalink





(B) OTHER EMPLOYEES- For purposes of pay (other than pay of members of the Commission) and employment benefits, rights, and privileges, all employees of the Commission shall be treated as if they were employees of the United States Senate. CommentsClose CommentsPermalink





(6) MEETINGS- The Commission shall meet at the call of the Chairperson. CommentsClose CommentsPermalink





(e) Director and Staff; Experts and Consultants- Subject to such review as the Comptroller determines necessary to assure the efficient administration of the Commission, the Commission may-- CommentsClose CommentsPermalink





(1) employ and fix the compensation of an Executive Director (subject to the approval of the Comptroller General) and such other ) and such other personnel as may be necessary to carry out its duties (without regard to the provisions of title 5, United States Code, governing appointments in the competitive service); CommentsClose CommentsPermalink





(2) seek such assistance and support as may be required in the performance of its duties from appropriate Federal departments and agencies; CommentsClose CommentsPermalink





(3) enter into contracts or make other arrangements, as may be necessary for the conduct of the work of the Commission (without regard to section 3709 of the Revised Statutes of the United States (41 U.S.C. 5)); CommentsClose CommentsPermalink





(4) make advance, progress, and other payments which relate to the work of the Commission; CommentsClose CommentsPermalink





(5) provide transportation and subsistence for persons serving without compensation; and CommentsClose CommentsPermalink





(6) prescribe such rules and regulations as it determines necessary with respect to the internal organization and operation of the Commission. CommentsClose CommentsPermalink





(f) Powers- CommentsClose CommentsPermalink





(1) OBTAINING OFFICIAL DATA- The Commission may secure directly from any department or agency of the United States information necessary to enable it to carry out this section. Upon request of the Chairperson, the head of that department or agency shall furnish that information to the Commission on an agreed upon schedule. CommentsClose CommentsPermalink





(2) DATA COLLECTION- In order to carry out its functions, the Commission shall-- CommentsClose CommentsPermalink





(A) utilize existing information, both published and unpublished, where possible, collected and assessed either by its own staff or under other arrangements made in accordance with this section; CommentsClose CommentsPermalink





(B) carry out, or award grants or contracts for, original research and experimentation, where existing information is inadequate; and CommentsClose CommentsPermalink





(C) adopt procedures allowing any interested party to submit information for the Commission’s use in making reports and recommendations. CommentsClose CommentsPermalink





(3) ACCESS OF GAO INFORMATION- The Comptroller shall have unrestricted access to all deliberations, records, and nonproprietary data of the Commission, immediately upon request. CommentsClose CommentsPermalink





(4) PERIODIC AUDIT- The Commission shall be subject to periodic audit by the Comptroller. CommentsClose CommentsPermalink





(g) Administrative and Support Services- The Comptroller shall provide such administrative and support services to the Commission as may be necessary to carry out this section. CommentsClose CommentsPermalink





(h) Authorization of Appropriations- There are authorized to be appropriated to the Commission such sums as may be necessary to carry out this section. CommentsClose CommentsPermalink