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

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

106th CONGRESS

1st Session

H. R. 1276

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.

IN THE HOUSE OF REPRESENTATIVES

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


A BILL

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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