In the nature of a substitute.

SA 1058. Mr. DODD (for himself and Mr. Shelby) proposed an amendment
to the bill H.R. 627, to amend the Truth in Lending Act to establish
fair and transparent practices relating to the extension of credit
under an open end consumer credit plan, and for other purposes; as
follows:

Strike all after the enacting clause and insert the
following:

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''.
(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.
Sec. 3. Effective date.

TITLE I--CONSUMER PROTECTION

Sec. 101. Protection of credit cardholders.
Sec. 102. Limits on fees and interest charges.
Sec. 103. Use of terms clarified.
Sec. 104. Application of card payments.
Sec. 105. Standards applicable to initial issuance of subprime or ``fee
harvester'' cards.
Sec. 106. Rules regarding periodic statements.
Sec. 107. Enhanced penalties.
Sec. 108. 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.
Sec. 204. Internet posting of credit card agreements.

TITLE III--PROTECTION OF YOUNG CONSUMERS

Sec. 301. Extensions of credit to underage consumers.
Sec. 302. Protection of young consumers from prescreened credit offers.
Sec. 303. Issuance of credit cards to certain college students.

TITLE IV--GIFT CARDS

Sec. 401. General-use prepaid cards, gift certificates, and store gift
cards.
Sec. 402. Relation to State laws.
Sec. 403. Effective date.

TITLE V--MISCELLANEOUS PROVISIONS

Sec. 501. Study and report on interchange fees.
Sec. 502. Board review of consumer credit plans and regulations.

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.

SEC. 3. EFFECTIVE DATE.

This Act and the amendments made by this Act shall become
effective 9 months after the date of enactment of this Act,
except as otherwise specifically provided in this Act.

TITLE I--CONSUMER PROTECTION

SEC. 101. PROTECTION OF CREDIT CARDHOLDERS.

(a) Advance Notice of Rate Increase and Other Changes
Required.--
(1) Amendment to tila.--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 Rate Increase and Other Changes
Required.--
``(1) Advance notice of increase in interest rate
required.--In the case of any credit card account under an
open end consumer credit plan, a creditor shall provide a
written notice of an increase in an annual percentage rate
(other than an increase due to the expiration of an
introductory annual percentage rate, or due solely to a
change in another rate of interest to which such rate is
indexed) not later than 45 days prior to the effective date
of the increase.
``(2) Advance notice of other significant changes
required.--In the case of any credit card account under an
open end consumer credit plan, a creditor shall provide a
written notice of any significant change, as determined by
rule of the Board, in the terms (including an increase in any
fee or finance charge, other than as provided in paragraph
(1)) of the cardholder agreement between the creditor and the
obligor, not later than 45 days prior to the effective date
of the change.
``(3) Notice of right to cancel.--Each notice required by
paragraph (1) or (2) 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 pursuant to rules
established by the Board before the effective date of the
subject rate increase or other change.
``(4) 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 or
through a method that is less beneficial to the obligor than
one of the methods described in section 171(c)(2), or the
imposition of any other penalty or fee.''.
(2) Effective date.--Notwithstanding section 3, section
127(i) of the Truth in Lending Act, as added by this
subsection, shall become effective 90 days after the date of
enactment of this Act.
(b) Retroactive Increase and Universal Default
Prohibited.--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:

``SEC. 171. LIMITS ON INTEREST RATE, FEE, AND FINANCE CHARGE
INCREASES APPLICABLE TO OUTSTANDING BALANCES.

``(a) In General.--In the case of any credit card account
under an open end consumer credit plan, no creditor may
increase any annual percentage rate, fee, or finance charge
applicable to any outstanding balance, except as permitted
under subsection (b).
``(b) Exceptions.--The prohibition under subsection (a)
shall not apply to--
``(1) an increase in an annual percentage rate upon the
expiration of a specified period of time, provided that--
``(A) prior to commencement of that period, the creditor
disclosed to the consumer, in a clear and conspicuous manner,
the length of the period and the annual percentage rate that
would apply after expiration of the period;
``(B) the increased annual percentage rate does not exceed
the rate disclosed pursuant to subparagraph (A); and
``(C) the increased annual percentage rate is not applied
to transactions that occurred prior to commencement of the
period;
``(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 the failure of the obligor to
comply with the terms of a workout or temporary hardship
arrangement, provided that the annual percentage rate, fee,
or finance charge applicable to a category of transactions
following any such increase does not exceed the rate, fee, or
finance charge that applied to that category of transactions
prior to commencement of the arrangement; or
``(4) an increase due solely to the fact that a minimum
payment by the obligor has not been received by the creditor
within 60 days after the due date for such payment, provided
that the creditor shall--
``(A) include, together with the notice of such increase
required under section 127(i), a clear and conspicuous
written statement of the reason for the increase and that the
increase will terminate not later than 6 months after the
date on which it is imposed, if the creditor receives the
required minimum payments from the obligor during that
period; and
``(B) terminate such increase not later than 6 months after
the date on which it is imposed, if the creditor receives the
required minimum payments during that period.
``(c) Repayment of Outstanding Balance.--
``(1) In general.--The creditor shall not change the terms
governing the repayment of any outstanding balance, except
that the creditor may provide the obligor with one of the
methods described in paragraph (2) of repaying any
outstanding balance, or a method that is no less beneficial
to the obligor than one of those methods.
``(2) Methods.--The methods described in this paragraph
are--
``(A) an amortization period of not less than 5 years,
beginning on the effective date of the increase set forth in
the notice required under section 127(i); or
``(B) a required minimum periodic payment that includes a
percentage of the outstanding balance that is equal to not
more than twice the percentage required before the effective
date of the increase set forth in the notice required under
section 127(i).
``(d) Outstanding Balance Defined.--For purposes of this
section, the term `outstanding balance' means the amount owed
on a credit card account under an open end consumer credit
plan as of the end of the 14th day after the date on which
the creditor provides notice of an increase in the annual
percentage rate, fee, or finance charge in accordance with
section 127(i).''.
(c) Interest Rate Reduction on Open End Consumer Credit
Plans.--Chapter 3 of the Truth in Lending Act (15 U.S.C. 1661
et seq.) is amended by adding at the end the following:

``SEC. 148. INTEREST RATE REDUCTION ON OPEN END CONSUMER
CREDIT PLANS.

``(a) In General.--If a creditor increases the annual
percentage rate applicable to a credit card account under an
open end consumer credit plan, based on factors including the
credit risk of the obligor, market conditions, or other
factors, the creditor shall consider changes in such factors
in subsequently determining whether to reduce the annual
percentage rate for such obligor.
``(b) Requirements.--With respect to any credit card
account under an open end consumer credit plan, the creditor
shall--
``(1) maintain reasonable methodologies for assessing the
factors described in subsection (a);
``(2) not less frequently than once every 6 months, review
accounts as to which the annual percentage rate has been
increased since January 1, 2009, to assess whether such
factors have changed (including whether any risk has
declined);

[[Page S5334]]

``(3) reduce the annual percentage rate previously
increased when a reduction is indicated by the review; and
``(4) in the event of an increase in the annual percentage
rate, provide in the written notice required under section
127(i) a statement of the reasons for the increase.
``(c) Rule of Construction.--This section shall not be
construed to require a reduction in any specific amount.
``(d) Rulemaking.--The Board shall issue final rules not
later than 9 months after the date of enactment of this
section to implement the requirements of and evaluate
compliance with this section, and subsections (a), (b), and
(c) shall become effective 15 months after that date of
enactment.''.
(d) Introductory and Promotional Rates.--Chapter 4 of the
Truth in Lending Act (15 U.S.C. 1666 et seq.) is amended by
inserting after section 171, as amended by this Act, the
following:

``SEC. 172. ADDITIONAL LIMITS ON INTEREST RATE INCREASES.

``(a) Limitation on Increases Within First Year.--Except in
the case of an increase described in paragraph (1) or (2) of
section 171(b), no increase in any annual percentage rate,
fee, or finance charge on any credit card account under an
open end consumer credit plan shall be effective before the
end of the 1-year period beginning on the date on which the
account is opened.
``(b) Promotional Rate Minimum Term.--No increase in any
annual percentage rate applicable to a credit card account
under an open end consumer credit plan that is a promotional
rate (as that term is defined by the Board) shall be
effective before the end of the 6-month period beginning on
the date on which the promotional rate takes effect, subject
to such reasonable exceptions as the Board may establish, by
rule.''.
(e) 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. Limits on interest rate, fee, and finance charge increases
applicable to outstanding balances.
``172. Additional limits on interest rate increases.
``173. Applicability of State laws.''.

SEC. 102. LIMITS ON FEES AND INTEREST CHARGES.

(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:
``(j) Prohibition on Penalties for On-Time Payments.--
``(1) Prohibition on double-cycle billing and penalties for
on-time payments.--Except as provided in paragraph (2), a
creditor may not impose any finance charge on a credit card
account under an open end consumer credit plan as a result of
the loss of any time period provided by the creditor within
which the obligor may repay any portion of the credit
extended without incurring a finance charge, with respect
to--
``(A) any balances for days in billing cycles that precede
the most recent billing cycle; or
``(B) any balances or portions thereof in the current
billing cycle that were repaid within such time period.
``(2) Exceptions.--Paragraph (1) does not apply to--
``(A) any adjustment to a finance charge as a result of the
resolution of a dispute; or
``(B) any adjustment to a finance charge as a result of the
return of a payment for insufficient funds.
``(k) Opt-in Required for 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, no such fee
shall be charged, unless the consumer has expressly elected
to permit the creditor, with respect to such account, to
complete transactions involving the extension of credit under
such account in excess of the amount of credit authorized.
``(2) Disclosure by creditor.--No election by a consumer
under paragraph (1) shall take effect unless the consumer,
before making such election, received a notice from the
creditor of any over-the-limit fee in the form and manner,
and at the time, determined by the Board. If the consumer
makes the election referred to in paragraph (1), the creditor
shall provide notice to the consumer of the right to revoke
the election, in the form prescribed by the Board, in any
periodic statement that includes notice of the imposition of
an over-the-limit fee during the period covered by the
statement.
``(3) Form of election.--A consumer may make or revoke the
election referred to in paragraph (1) orally, electronically,
or in writing, pursuant to regulations prescribed by the
Board. The Board shall prescribe regulations to ensure that
the same options are available for both making and revoking
such election.
``(4) Time of election.--A consumer may make the election
referred to in paragraph (1) at any time, and such election
shall be effective until the election is revoked in the
manner prescribed under paragraph (3).
``(5) Regulations.--The Board shall prescribe regulations--
``(A) governing disclosures under this subsection; and
``(B) that prevent unfair or deceptive acts or practices in
connection with the manipulation of credit limits designed to
increase over-the-limit fees or other penalty fees.
``(6) Rule of construction.--Nothing in this subsection
shall be construed to prohibit a creditor from completing an
over-the-limit transaction, provided that a consumer who has
not made a valid election under paragraph (1) is not charged
an over-the-limit fee for such transaction.
``(l) Limit on Fees Related to Method of Payment.--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, unless
such payment involves an expedited service by a service
representative of the creditor.''.
(b) Reasonable Penalty Fees.--
(1) In general.--Chapter 3 of the Truth in Lending Act (15
U.S.C. 1661 et seq.), as amended by this Act, is amended by
adding at the end the following:

``SEC. 149. REASONABLE PENALTY FEES ON OPEN END CONSUMER
CREDIT PLANS.

``(a) In General.--The amount of any penalty fee or charge
that a card issuer may impose with respect to a credit card
account under an open end consumer credit plan in connection
with any omission with respect to, or violation of, the
cardholder agreement, including any late payment fee, over
the limit fee, or any other penalty fee or charge, shall be
reasonable and proportional to such omission or violation.
``(b) Rulemaking Required.--The Board, in consultation with
the Comptroller of the Currency, the Board of Directors of
the Federal Deposit Insurance Corporation, the Director of
the Office of Thrift Supervision, and the National Credit
Union Administration Board, shall issue final rules not later
than 9 months after the date of enactment of this section, to
establish standards for assessing whether the amount of any
penalty fee or charge described under subsection (a) is
reasonable and proportional to the omission or violation to
which the fee or charge relates. Subsection (a) shall become
effective 15 months after the date of enactment of this
section.
``(c) Considerations.--In issuing rules required by this
section, the Board shall consider--
``(1) the cost incurred by the creditor from such omission
or violation;
``(2) the deterrence of such omission or violation by the
cardholder;
``(3) the conduct of the cardholder; and
``(4) such other factors as the Board may deem necessary or
appropriate.
``(d) Differentiation Permitted.--In issuing rules required
by this subsection, the Board may establish different
standards for different types of fees and charges, as
appropriate.
``(e) Safe Harbor Rule Authorized.--The Board, in
consultation with the Comptroller of the Currency, the Board
of Directors of the Federal Deposit Insurance Corporation,
the Director of the Office of Thrift Supervision, and the
National Credit Union Administration Board, may issue rules
to provide an amount for any penalty fee or charge described
under subsection (a) that is presumed to be reasonable and
proportional to the omission or violation to which the fee or
charge relates.''.
(2) Clerical amendments.--Chapter 3 of the Truth in Lending
Act (15 U.S.C. 1661 et seq.) is amended--
(A) in the chapter heading, by inserting ``AND LIMITS ON
CREDIT CARD FEES'' after ``ADVERTISING''; and
(B) in the table of sections for the chapter, by adding at
the end the following:

``148. Interest rate reduction on open end consumer credit plans.
``149. Reasonable penalty fees on open end consumer credit plans.''.

SEC. 103. 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:
``(m) Use of Term `Fixed Rate'.--With respect to the terms
of any credit card account under an open end consumer credit
plan, 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.''.

SEC. 104. 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'';
(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.--
``(1) In general.--Upon receipt of a payment from a
cardholder, the card issuer shall apply amounts in excess of
the minimum payment amount 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.

[[Page S5335]]

``(2) Clarification relating to certain deferred interest
arrangements.--A creditor shall allocate the entire amount
paid by the consumer in excess of the minimum payment amount
to a balance on which interest is deferred during the last 2
billing cycles immediately preceding the expiration of the
period during which interest is deferred.
``(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. 105. STANDARDS APPLICABLE TO INITIAL ISSUANCE OF
SUBPRIME OR ``FEE HARVESTER'' 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 new subsection:
``(n) Standards Applicable to Initial Issuance of Subprime
or `Fee Harvester' Cards.--
``(1) In general.--If the terms of a credit card account
under an open end consumer credit plan require the payment of
any fees (other than any late fee, over-the-limit fee, or fee
for a payment returned for insufficient funds) by the
consumer in the first year during which the account is opened
in an aggregate amount in excess of 25 percent of the total
amount of credit authorized under the account when the
account is opened, no payment of any fees (other than any
late fee, over-the-limit fee, or fee for a payment returned
for insufficient funds) may be made from the credit made
available under the terms of the account.
``(2) Rule of construction.--No provision of this
subsection may be construed as authorizing any imposition or
payment of advance fees otherwise prohibited by any provision
of law.''.

SEC. 106. RULES REGARDING PERIODIC STATEMENTS.

(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:
``(o) Due Dates for Credit Card Accounts.--
``(1) In general.--The payment due date for a credit card
account under an open end consumer credit plan shall be the
same day each month.
``(2) Weekend or holiday due dates.--If the payment due
date for a credit card account under an open end consumer
credit plan is a day on which the creditor does not receive
or accept payments by mail (including weekends and holidays),
the creditor may not treat a payment received on the next
business day as late for any purpose.''.
(b) Length of Billing Period.--
(1) In general.--Section 163 of the Truth in Lending Act
(15 U.S.C. 1666b) is amended to read as follows:

``SEC. 163. TIMING OF PAYMENTS.

``(a) Time to Make Payments.--A creditor may not treat a
payment on an open end consumer credit plan as late for any
purpose, unless the creditor has adopted reasonable
procedures designed to ensure that each periodic statement
including the information required by section 127(b) is
mailed or delivered to the consumer not later than 21 days
before the payment due date.
``(b) Grace Period.--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
additional finance charge, such additional finance charge may
not be imposed with respect to such portion of the credit
extended for the billing cycle of which such period is a
part, unless a statement which includes the amount upon which
the finance charge for the period is based was mailed or
delivered to the consumer not later than 21 days before the
date specified in the statement by which payment must be made
in order to avoid imposition of that finance charge.''.
(2) Effective date.--Notwithstanding section 3, section 163
of the Truth in Lending Act, as amended by this subsection,
shall become effective 90 days after the date of enactment of
this Act.
(c) Clerical Amendments.--The table of sections for chapter
4 of the Truth in Lending Act is amended--
(1) by striking the item relating to section 163 and
inserting the following:

``163. Timing of payments.''; and
(2) 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.''.

SEC. 107. 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''.

SEC. 108. 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.

TITLE II--ENHANCED CONSUMER DISCLOSURES

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:
``(11)(A) A written statement in the following form:
`Minimum Payment Warning: Making only the minimum payment
will increase the amount of interest you pay and the time it
takes to repay your balance.', or such similar statement as
is established by the Board pursuant to consumer testing.
``(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;
``(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
``(iv) a toll-free telephone number at which the consumer
may receive information about accessing credit counseling and
debt management services.
``(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.
``(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).''.
(c) Guidelines Required.--
(1) In general.--Not later than 6 months 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, 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.

[[Page S5336]]

(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.
(3) Criteria.--The Secretary shall only certify a nonprofit
budget and credit counseling agency for purposes of this
subsection that--
(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
(B) at a minimum--
(i) is registered as a nonprofit entity under section
501(c) of the Internal Revenue Code of 1986;
(ii) has a board of directors, the majority of the members
of which--

(I) are not employed by such agency; and
(II) will not directly or indirectly benefit financially
from the outcome of the counseling services provided by such
agency;

(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;
(iv) provides for safekeeping and payment of client funds,
including an annual audit of the trust accounts and
appropriate employee bonding;
(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;
(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;
(vii) provides trained counselors who--

(I) receive no commissions or bonuses based on the outcome
of the counseling services provided;
(II) have adequate experience; and
(III) have been adequately trained to provide counseling
services to individuals in financial difficulty, including
the matters described in clause (vi);

(viii) demonstrates adequate experience and background in
providing credit counseling;
(ix) has adequate financial resources to provide continuing
support services for budgeting plans over the life of any
repayment plan; and
(x) is accredited by an independent, nationally recognized
accrediting organization.

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:
``(12) Requirements relating to late payment deadlines and
penalties.--
``(A) Late payment deadline 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, 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.
``(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) 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.''.

SEC. 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 that has not been previously
disclosed or''.

SEC. 204. INTERNET POSTING OF CREDIT CARD AGREEMENTS.

(a) In General.--Section 122 of the Truth and Lending Act
(15 U.S.C. 1632) is amended by adding at the end the
following new subsection:
``(d) Additional Electronic Disclosures.--
``(1) Posting agreements.--Each creditor shall establish
and maintain an Internet site on which the creditor shall
post the written agreement between the creditor and the
consumer for each credit card account under an open-end
consumer credit plan.
``(2) Creditor to provide contracts to the board.--Each
creditor shall provide to the Board, in electronic format,
the consumer credit card agreements that it publishes on its
Internet site.
``(3) Record repository.--The Board shall establish and
maintain on its publicly available Internet site a central
repository of the consumer credit card agreements received
from creditors pursuant to this subsection, and such
agreements shall be easily accessible and retrievable by the
public.
``(4) Exception.--This subsection shall not apply to
individually negotiated changes to contractual terms, such as
individually modified workouts or renegotiations of amounts
owed by a consumer under an open end consumer credit plan.
``(5) Regulations.--The Board, in consultation with the
other Federal banking agencies (as that term is defined in
section 603) and the Federal Trade Commission, may promulgate
regulations to implement this subsection, including
specifying the format for posting the agreements on the
Internet sites of creditors and establishing exceptions to
paragraphs (1) and (2), in any case in which the
administrative burden outweighs the benefit of increased
transparency, such as where a credit card plan has a de
minimis number of consumer account holders.''.

TITLE III--PROTECTION OF YOUNG CONSUMERS

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:
``(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 a consumer who has not attained the
age of 21 as of the date of submission of the application
shall require--
``(i) the signature of a cosigner, including the parent,
legal guardian, spouse, or any other individual who has
attained 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; or
``(ii) submission by the consumer of financial information,
including through an application, indicating an independent
means of repaying any obligation arising from the proposed
extension of credit in connection with the account.
``(C) Safe harbor.--The Board shall promulgate regulations
providing standards that, if met, would satisfy the
requirements of subparagraph (B)(ii).''.

SEC. 302. PROTECTION OF YOUNG CONSUMERS FROM PRESCREENED
CREDIT OFFERS.

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 does not contain a date of birth
that shows that the consumer has not attained the age of 21,
or, if the date of birth on the consumer report shows that
the consumer has not attained the age of 21, such consumer
consents to the consumer reporting agency to such
furnishing.''.

SEC. 303. ISSUANCE OF CREDIT CARDS TO CERTAIN COLLEGE
STUDENTS.

Section 127 of the Truth in Lending Act (15 U.S.C. 1637) is
amended by adding at the end the following new subsection:
``(p) Parental Approval Required to Increase Credit Lines
for Accounts for Which Parent Is Jointly Liable.--No increase
may be made in the amount of credit authorized to be extended
under a credit card account for which a parent, legal
guardian, or spouse of the consumer, or any other individual
has assumed joint liability for debts incurred by the
consumer in connection with the account before the consumer
attains the age of 21, unless that parent, guardian, or
spouse approves in writing, and assumes joint liability for,
such increase.''.

TITLE IV--GIFT CARDS

SEC. 401. GENERAL-USE PREPAID CARDS, GIFT CERTIFICATES, AND
STORE GIFT CARDS.

The Electronic Fund Transfer Act (15 U.S.C. 1693 et seq.)
is amended--
(1) by redesignating sections 915 through 921 as sections
916 through 922, respectively; and
(2) by inserting after section 914 the following:

[[Page S5337]]

``SEC. 915. GENERAL-USE PREPAID CARDS, GIFT CERTIFICATES, AND
STORE GIFT CARDS.

``(a) Definitions.--In this section, the following
definitions shall apply:
``(1) Dormancy fee; inactivity charge or fee.--The terms
`dormancy fee' and `inactivity charge or fee' mean a fee,
charge, or penalty for non-use or inactivity of a gift
certificate, store gift card, or general-use prepaid card.
``(2) General use prepaid card, gift certificate, and store
gift card.--
``(A) General-use prepaid card.--The term `general-use
prepaid card' means a card or other payment code or device
issued by any person that is--
``(i) redeemable at multiple, unaffiliated merchants or
service providers, or automated teller machines;
``(ii) issued in a requested amount, whether or not that
amount may, at the option of the issuer, be increased in
value or reloaded if requested by the holder;
``(iii) purchased or loaded on a prepaid basis; and
``(iv) honored, upon presentation, by merchants for goods
or services, or at automated teller machines.
``(B) Gift certificate.--The term `gift certificate' means
an electronic promise that is--
``(i) redeemable at a single merchant or an affiliated
group of merchants that share the same name, mark, or logo;
``(ii) issued in a specified amount that may not be
increased or reloaded;
``(iii) purchased on a prepaid basis in exchange for
payment; and
``(iv) honored upon presentation by such single merchant or
affiliated group of merchants for goods or services.
``(C) Store gift card.--The term `store gift card' means an
electronic promise, plastic card, or other payment code or
device that is--
``(i) redeemable at a single merchant or an affiliated
group of merchants that share the same name, mark, or logo;
``(ii) issued in a specified amount, whether or not that
amount may be increased in value or reloaded at the request
of the holder;
``(iii) purchased on a prepaid basis in exchange for
payment; and
``(iv) honored upon presentation by such single merchant or
affiliated group of merchants for goods or services.
``(D) Exclusions.--The terms `general-use prepaid card',
`gift certificate', and `store gift card' do not include an
electronic promise, plastic card, or payment code or device
that is--
``(i) used solely for telephone services;
``(ii) reloadable and not marketed or labeled as a gift
card or gift certificate;
``(iii) a loyalty, award, or promotional gift card, as
defined by the Board;
``(iv) not marketed to the general public; or
``(v) issued in paper form only (including for tickets and
events).
``(3) Service fee.--
``(A) In general.--The term `service fee' means a periodic
fee, charge, or penalty for holding or use of a gift
certificate, store gift card, or general-use prepaid card.
``(B) Exclusion.--With respect to a general-use prepaid
card, the term `service fee' does not include a one-time
initial issuance fee.
``(b) Prohibition on Imposition of Fees or Charges.--
``(1) In general.--Except as provided under paragraphs (2)
through (4), it shall be unlawful for any person to impose a
dormancy fee, an inactivity charge or fee, or a service fee
with respect to a gift certificate, store gift card, or
general-use prepaid card.
``(2) Exceptions.--A dormancy fee, inactivity charge or
fee, or service fee may be charged with respect to a gift
certificate, store gift card, or general-use prepaid card,
if--
``(A) there has been no activity with respect to the
certificate or card in the 12-month period ending on the date
on which the charge or fee is imposed;
``(B) the disclosure requirements of paragraph (3) have
been met;
``(C) not more than one fee may be charged in any given
month; and
``(D) any additional requirements that the Board may
establish through rulemaking under subsection (d) have been
met.
``(3) Disclosure requirements.--The disclosure requirements
of this paragraph are met if--
``(A) the gift certificate, store gift card, or general-use
prepaid card clearly and conspicuously states--
``(i) that a dormancy fee, inactivity charge or fee, or
service fee may be charged;
``(ii) the amount of such fee or charge;
``(iii) how often such fee or charge may be assessed; and
``(iv) that such fee or charge may be assessed for
inactivity; and
``(B) the issuer of such certificate or card informs the
purchaser of such charge or fee before such certificate or
card is purchased, regardless of whether the certificate or
card is purchased in person, over the Internet, or by
telephone.
``(4) Exclusion.--The prohibition under paragraph (1) shall
not apply to any gift certificate--
``(A) that is distributed pursuant to an award, loyalty, or
promotional program, as defined by the Board; and
``(B) with respect to which, there is no money or other
value exchanged.
``(c) Prohibition on Sale of Gift Cards With Expiration
Dates.--
``(1) In general.--Except as provided under paragraph (2),
it shall be unlawful for any person to sell or issue a gift
certificate, store gift card, or general-use prepaid card
that is subject to an expiration date.
``(2) Exceptions.--A gift certificate, store gift card, or
general-use prepaid card may contain an expiration date if--
``(A) the expiration date is not earlier than 5 years after
the date on which the gift certificate was issued, or the
date on which card funds were last loaded to a store gift
card or general-use prepaid card; and
``(B) the terms of expiration are prominently disclosed in
all capital letters that are presented in at least 10-point
type.
``(d) Additional Rulemaking.--
``(1) In general.--The Board shall prescribe regulations to
carry out this section, in addition to any other rules or
regulations required by this title, including such additional
requirements as appropriate relating to the amount of
dormancy fees, inactivity charges or fees, or service fees
that may be assessed and the amount of remaining value of
gift certificate, store gift card, or general-use prepaid
card below which such charges or fees may be assessed.
``(2) Consultation.--In prescribing regulations under this
subsection, the Board shall consult with the Federal Trade
Commission.
``(3) Timing; effective date.--The regulations required by
this subsection shall be issued in final form not later than
9 months after the date of enactment of the Credit CARD Act
of 2009.''.

SEC. 402. RELATION TO STATE LAWS.

Section 920 of the Electronic Fund Transfer Act (as
redesignated by this title) is amended by inserting
``dormancy fees, inactivity charges or fees, service fees, or
expiration dates of gift certificates, store gift cards, or
general-use prepaid cards,'' after ``electronic fund
transfers,''.

SEC. 403. EFFECTIVE DATE.

This title and the amendments made by this title shall
become effective 15 months after the date of enactment of
this Act.

TITLE V--MISCELLANEOUS PROVISIONS

SEC. 501. STUDY AND REPORT ON INTERCHANGE FEES.

(a) Study Required.--The Comptroller General of the United
States (in this section referred to as the ``Comptroller'')
shall conduct a study on use of credit by consumers,
interchange fees, and their effects on consumers and
merchants.
(b) Subjects for Review.--In conducting the study required
by this section, the Comptroller shall review--
(1) the extent to which interchange fees are required to be
disclosed to consumers and merchants, whether merchants are
restricted from disclosing interchange or merchant discount
fees, 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;
(4) the consequences of the undisclosed nature of
interchange fees on merchants and consumers with regard to
prices charged for goods and services;
(5) how merchant discount fees compare to the credit losses
and other costs that merchants incur to operate their own
credit networks or store cards;
(6) the extent to which the rules of payment card networks
and their policies regarding interchange fees are accessible
to merchants;
(7) other jurisdictions where the central bank has
regulated interchange fees and the impact on retail prices to
consumers in such jurisdictions;
(8) whether and to what extent merchants are permitted to
discount for cash; and
(9) the extent to which interchange fees allow smaller
financial institutions and credit unions to offer payment
cards and compete against larger financial institutions.
(c) 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.

SEC. 502. BOARD REVIEW OF CONSUMER CREDIT PLANS AND
REGULATIONS.

(a) Required Review.--Not later than 2 years after the
effective date of this Act and every 2 years thereafter,
except as provided in subsection (c)(2), the Board shall
conduct a review of the consumer credit card market,
including--
(1) the terms of credit card agreements and the practices
of credit card issuers;
(2) the effectiveness of disclosures of terms, fees, and
other expenses of credit card plans;
(3) the adequacy of protections against unfair or deceptive
acts or practices relating to credit card plans;
(4) the cost and availability of credit, particularly with
respect to non-prime borrowers;

[[Page S5338]]

(5) the safety and soundness of credit card issuers;
(6) the use of risk-based pricing; and
(7) credit card product innovation.
(b) Solicitation of Public Comment.--In conducting the
review required by subsection (a), the Board shall solicit
comment from consumers, credit card issuers, and other
interested parties, such as through hearings or written
comments.
(c) Regulations.--Following the review required by
subsection (a), the Board shall publish notice in the Federal
Register that--
(1) summarizes the review, the comments received from the
public solicitation, and other evidence gathered by the
Board, such as through consumer testing or other research,
and
(2) proposes new or revised regulations or interpretations
to update or revise disclosures and protections for consumer
credit cards, as appropriate; or
(3) states the reasons for any determination of the Board
that new or revised regulations are not proposed under
paragraph (2).
______