S. 414 (111th): Credit Card Accountability Responsibility and Disclosure Act of 2009

111th Congress, 2009–2010. Text as of Feb 11, 2009 (Introduced).

Status & Summary | PDF | Source: GPO

II

111th CONGRESS

1st Session

S. 414

IN THE SENATE OF THE UNITED STATES

February 11, 2009

(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. Casey) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs

A BILL

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

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.

(b)

Table of contents

The table of contents for this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Regulatory authority.

TITLE I—Consumer protection

Sec. 101. Prior notice of rate increases required.

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

Sec. 103. Limits on fees and interest charges.

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

Sec. 105. Use of terms clarified.

Sec. 106. Application of card payments.

Sec. 107. Length of billing period.

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

Sec. 109. Enhanced penalties.

Sec. 110. Enhanced oversight.

Sec. 111. Clerical amendments.

TITLE II—ENHANCED CONSUMER DISCLOSURES

Sec. 201. Payoff timing disclosures.

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

Sec. 203. Renewal disclosures.

TITLE III—PROTECTION OF YOUNG CONSUMERS

Sec. 301. Extensions of credit to underage consumers.

Sec. 302. Restrictions on certain affinity cards.

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

TITLE IV—Federal agency coordination

Sec. 401. Inclusion of all Federal banking agencies.

TITLE V—Miscellaneous provisions

Sec. 501. Study and report.

Sec. 502. Credit Card Safety Rating System Commission.

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.

I

Consumer protection

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:

(i)

Advance notice of increase in interest rate required

(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)—

(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

(B)

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

(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.

.

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:

(j)

Freeze on interest rate terms and fees on canceled cards

(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.

(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.

.

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:

(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.

(l)

Opt-out of creditor authorization of over-the-limit transactions if fees are imposed

(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).

(2)

Notification by consumer

A consumer shall notify a creditor under paragraph (1)—

(A)

through the notification system maintained by the creditor under paragraph (4); or

(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.

(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.

(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).

(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—

(A)

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

(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.

(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.

(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)—

(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

(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.

(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.

(o)

Limits on certain 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 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.

(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—

(A)

such fee reasonably reflects the 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.

.

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:

(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.

.

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:

(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:

(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.

(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).

.

106.

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:

164.

Prompt and fair crediting of payments

(a)

In general

Payments

;

(2)

by inserting , by 5:00 p.m. on the date on which such payment is due, after in readily identifiable form;

(3)

by striking manner, location, and time and inserting manner, and location; and

(4)

by adding at the end the following:

(b)

Application of payments

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 a way that minimizes the amount 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.

(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.

.

107.

Length of billing period

Section 163(a) of the Truth in Lending Act (15 U.S.C. 1668(a)) is amended by striking mailed at least fourteen days prior and inserting mailed at least 21 days prior.

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—

(1)

by redesignating section 171 as section 173; and

(2)

by inserting after section 170 the following:

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.

(b)

Exceptions

The limitation under subsection (a) shall not apply to—

(1)

an increase due to the scheduled expiration of an introductory term;

(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;

(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—

(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

(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; or

(4)

a change that takes effect upon renewal of the card in accordance with section 172.

(c)

Map to lower rate

(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—

(A)

of the discrete, specific action or omission of the consumer on which the increase was based; and

(B)

that the increase will terminate in 6 months if the consumer does not commit further violations.

(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.

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.

.

(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:

171. Universal defaults prohibited.

172. Unilateral changes in credit card agreement prohibited.

173. Applicability of State laws.

.

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.

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:

(r)

Evaluation of credit card policies and procedures

(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.

(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.

.

(b)

Strengthened 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;

(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)

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

(IV)

the number of cardholders who are paying above such stated default annual percentage rate;

(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 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—

(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.

.

111.

Clerical amendments

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

(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

(2)

in the second sentence, by inserting or open end consumer credit plan after credit plan each place that term appears.

II

ENHANCED CONSUMER DISCLOSURES

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:

(11)
(A)

A written statement in the following form: Minimum Payment Warning: Making only the minimum payment will increase the interest rate you pay and the time it takes to repay your balance..

(B)

Repayment information that would apply to the outstanding balance of the consumer under the credit plan, including—

(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;

(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; and

(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.

(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.

(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.

(D)

All of the information described in subparagraph (B) shall—

(i)

be disclosed in the form and manner which the Board shall prescribe, by regulation, and in a manner that avoids duplication; and

(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.

(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—

(i)

contains clear and concise headings for each item of such information; and

(ii)

provides a clear and concise form stating each item of information required to be disclosed under each such heading.

(F)

In prescribing the form of the table under subparagraph (E), the Board shall require that—

(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

(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).

(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.

.

(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)..

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:

(12)

Requirements relating to late payment deadlines and penalties

(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—

(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

(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.

(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.

(C)

Requirements relating to postmark date

(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.

(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.

(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.

.

203.

Renewal disclosures

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

(1)

by striking paragraph (2);

(2)

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

(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.

III

PROTECTION OF YOUNG CONSUMERS

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:

(8)

Applications from underage consumers

(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).

(B)

Application requirements

An application to open a credit card account by an individual who has not attained the age of 21 as of the date of submission of the application shall require—

(i)

the signature of the parent, legal guardian, 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;

(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

(iii)

completion of a certified financial literacy or financial education course designed for young consumers.

(C)

Certified financial literacy or education courses for young consumers

(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—

(I)

proven track record in producing changed consumer behavior; and

(II)

use of practices or curricula that have been shown to change consumer behavior.

(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.

(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.

.

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:

(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.

.

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—

(1)

in clause (ii), by striking and at the end; and

(2)

in clause (iii), by striking the period at the end and inserting the following:

; and

(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.

.

(b)

Opt-In for young consumers

Section 604(e) of the Fair Credit Reporting Act (15 U.S.C. 1681b(e)) is amended—

(1)

by striking the subsection heading and inserting the following:

(e)

Election of consumers regarding lists

; and

(2)

by adding at the end the following:

(7)

Opt-in for underage consumers

(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.

(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.

(C)

Effectiveness of election

An election by a consumer under subparagraph (A) to be included in a list provided by a consumer reporting agency—

(i)

shall be effective until the earlier of—

(I)

the 21st birthday of the consumer; or

(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

(ii)

shall be effective with respect to each affiliate of the agency.

(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.

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IV

Federal agency coordination

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—

(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

(2)

by inserting in consultation with the Commission after shall prescribe regulations.

(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..

(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)

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.

.

(d)

GAO study and report

Not later than 18 months after the date of enactment of this Act, the Comptroller General 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.

(e)

Technical and conforming amendments

Section 18(f) of the Federal Trade Commission Act (15 U.S.C. 57a(f)) is amended—

(1)

in the subsection heading, by striking Board and all that follows through Administration and inserting appropriate Federal banking agencies;

(2)

in paragraph (1), in the first sentence—

(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

(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;

(3)

in paragraph (1), in the final sentence—

(A)

by striking each such Board and inserting each such appropriate Federal banking agency;

(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;

(C)

by striking (A) any such Board and inserting (A) any such appropriate Federal banking agency; and

(D)

by striking with respect to banks, savings and loan institutions and inserting with respect to depository institutions;

(4)

in paragraph (2)(C), by inserting than after (other;

(5)

in paragraph (3), by inserting by the Director of the Office of Thrift Supervision before the period at the end;

(6)

in paragraph (4), by inserting by the National Credit Union Administration before the period at the end;

(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; and

(8)

by adding at the end the following new paragraph:

(8)

For purposes of this subsection—

(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;

(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

(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).

.

V

Miscellaneous provisions

501.

Study and report

(a)

Study required

The Comptroller General (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—

(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;

(2)

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

(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

(4)

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

(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.

502.

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.

(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).

(c)

Duties

The duties of the Commission shall be—

(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;

(2)

to assess the impact on credit card transparency and consumer safety of various rating system policy options, including—

(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;

(B)

making the use of the system mandatory for all cards;

(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;

(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

(E)

requiring consumer access to ratings through public website and other outreach programs;

(3)

if it is deemed beneficial, to make recommendations to Congress concerning how such a system should be devised;

(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

(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.

(d)

Membership

(1)

Number and appointment

The Commission shall be composed of 15 members appointed by the Comptroller, in accordance with this section.

(2)

Qualifications

(A)

In general

The membership of the Commission, subject to subparagraph (B), shall include individuals—

(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

(ii)

who provide a mix of different professions, a broad geographic representation, and a balance between urban and rural representatives.

(B)

Makeup of Commission

The Commission shall be comprised of—

(i)

4 representatives from consumer groups;

(ii)

4 representatives from credit card issuers or banks;

(iii)

7 representatives from nonprofit research entities or nonpartisan experts in banking and credit cards; and

(iv)

not fewer than 1 of the members described in clauses (i) through (iii) who represents each of—

(I)

the elderly;

(II)

economically disadvantaged consumers;

(III)

racial or ethnic minorities; and

(IV)

students and minors.

(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).

(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 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.

(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.

(5)

Compensation

(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 under section 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.

(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.

(6)

Meetings

The Commission shall meet at the call of the Chairperson.

(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—

(1)

employ and fix the compensation of an Executive Director (subject to the approval of the Comptroller General) 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);

(2)

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

(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));

(4)

make advance, progress, and other payments which relate to the work of the Commission;

(5)

provide transportation and subsistence for persons serving without compensation; and

(6)

prescribe such rules and regulations as it determines necessary with respect to the internal organization and operation of the Commission.

(f)

Powers

(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.

(2)

Data collection

In order to carry out its functions, the Commission shall—

(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;

(B)

carry out, or award grants or contracts for, original research and experimentation, where existing information is inadequate; and

(C)

adopt procedures allowing any interested party to submit information for the Commission's use in making reports and recommendations.

(3)

Access of GAO information

The Comptroller shall have unrestricted access to all deliberations, records, and nonproprietary data of the Commission, immediately upon request.

(4)

Periodic audit

The Commission shall be subject to periodic audit by the Comptroller.

(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.

(h)

Authorization of appropriations

There are authorized to be appropriated to the Commission such sums as may be necessary to carry out this section.