[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5280 Introduced in House (IH)]
110th CONGRESS
2d Session
H. R. 5280
To prevent unfair practices in credit card accounts, and for other
purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
February 7, 2008
Mr. Lincoln Davis of Tennessee introduced the following bill; which was
referred to the Committee on Financial Services
_______________________________________________________________________
A BILL
To prevent unfair practices in credit card accounts, 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 ``Stop Unfair Practices in Credit
Cards Act of 2007''.
SEC. 2. STOP UNFAIR INTEREST RATES AND FEES.
Section 163 of the Truth in Lending Act (15 U.S.C. 1666b) is
amended--
(1) by striking the section title and all that follows
through ``If an open'' and inserting the following:
``Sec. 163. Billing period and finance charges
``(a) Billing Period.--
``(1) Fourteen-day minimum.--If an open'';
(2) by striking ``(b) Subsection (a)'' and inserting the
following:
``(2) Excusable cause.--Subsection (a)''; and
(3) by adding at the end the following:
``(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.
``(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.
``(d) Limits on Interest Rate Increases.--
``(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--
``(A) such increase is pursuant to the expiration
of an introductory rate which was disclosed under
section 127(c)(6);
``(B) such increase is pursuant to the application
of a variable rate which was disclosed under section
127(c)(1)(A)(i)(II);
``(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; or
``(D) the obligor has provided specific written
consent to such increase at the time such increase was
proposed.
``(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.
``(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.
``(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.
``(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.
``(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)--
``(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; and
``(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.
``(i) Other Fees.--
``(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.
``(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--
``(A) such fee reasonably reflects the actual costs
incurred by the creditor to perform such currency
exchange;
``(B) the creditor discloses publicly its method
for calculating such fee; and
``(C) the primary Federal regulator of such
creditor determines that the method for calculating
such fee complies with this paragraph.
``(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.''.
SEC. 3. STOP UNFAIR APPLICATION OF CARD PAYMENTS.
Section 164 of the Truth in Lending Act (15 U.S.C. 1666c) is
amended--
(1) by striking the section heading and all that follows
through ``Payments'' and inserting the following:
``Sec. 164. Prompt and fair crediting of payments
``(a) In General.--Payments''; and
(2) by adding at the end the following:
``(b) Application of Payment.--Upon receipt of a payment from a
cardholder, the card issuer shall--
``(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
``(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.
``(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.''.
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:
``(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.''.
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:
``(cc) Primary Federal Regulator.--
``(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.
``(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.''.
SEC. 6. STRENGTHEN CREDIT CARD INFORMATION COLLECTION.
Section 136(b) of the Truth in Lending Act (15 U.S.C. 1646(b)) is
amended--
(1) in paragraph (1)--
(A) by striking ``The Board shall'' and inserting
the following:
``(A) In general.--The Board shall''; and
(B) by adding at the end the following:
``(B) Information to be included.--The information
under subparagraph (A) shall include, as of a date
designated by the Board--
``(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;
``(ii) for each type of transaction or
event identified under clause (i)--
``(I) each distinct interest rate
charged by the card issuer to a
cardholder, as of the designated date;
and
``(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;
``(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;
``(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;
``(v) the total number of cardholders that
incurred any interest charge or any fee during
the calendar month immediately preceding the
designated date; and
``(vi) any other information related to
interest rates, fees, or other charges that the
Board deems of interest.''; and
(2) by adding at the end the following:
``(5) Report to the congress.--The Board shall, on an
annual basis, transmit to the 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--
``(A) the imposition of interest rates on
cardholders, including separate estimates for--
``(i) interest with an annual percentage
rate of less than 25 percent; and
``(ii) interest with an annual percentage
rate equal to or greater than 25 percent;
``(B) the imposition of fees on cardholders;
``(C) the imposition of fees on merchants; and
``(D) any other material source of income, while
specifying the nature of that income.''.
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.
SEC. 8. EFFECTIVE DATE.
This Act and the amendments made by this Act shall take effect 180
days after the date of the enactment of this Act.
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