Credit Card Consumer Protection Act of 1997 - Amends the Truth in Lending Act to: (1) prohibit fee assessment against a credit card account under an open-end consumer credit plan solely on the basis of on-time payments; (2) require advance notice of any interest rate increase for a credit card account, and of the consumer's right to cancel such account before the effective date of that increase; and (3) prohibit post-cancellation increases in interest rates and fees on the outstanding balance of any canceled cards.
Mandates disclosure to a credit card account holder of the fees and interest rates imposed upon credit advances through the use of third party checks.
Proscribes over-the-limit fees in creditor-approved transactions, and two-cycle billing.
Prescribes additional notice requirements governing introductory rates to identify the fixed and variable interest rate which will apply following the introductory period.
[Congressional Bills 105th Congress]
[From the U.S. Government Printing Office]
[H.R. 1975 Introduced in House (IH)]
105th CONGRESS
1st Session
H. R. 1975
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
June 19, 1997
Mr. Kennedy of Massachusetts 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 1997''.
SEC. 2. FEES FOR ON-TIME PAYMENTS PROHIBITED.
Section 127 of the Truth in Lending Act (15 U.S.C. 1637) is amended
by inserting the following new subsection after subsection (h) (as
added by section 2 of this Act):
``(i) 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 the following new subsection after subsection (i) (as
added by section 3 of this Act):
``(j) 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 the following new subsection after subsection (k) (as
added by section 5 of this Act):
``(l) 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 the following new subsection after subsection (l) (as
added by section 6 of this Act):
``(m) 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 the following new subsection after subsection (m) (as
added by section 7 of this Act):
``(n) 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.''.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Banking and Financial Services.
Referred to the Subcommittee on Financial Institutions and Consumer Credit.
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