[Senate Report 111-16]
[From the U.S. Government Publishing Office]
Calendar No. 54
111th Congress Report
SENATE
1st Session 111-16
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AMENDING THE CONSUMER CREDIT PROTECTION ACT, TO BAN ABUSIVE CREDIT
PRACTICES, ENHANCE CONSUMER DISCLOSURES, PROTECT UNDERAGE CONSUMERS,
AND FOR OTHER PURPOSES
_______
May 4, 2009.--Ordered to be printed
_______
Mr. Dodd, from the Committee on Banking, Housing, and Urban Affairs,
submitted the following
R E P O R T
[To accompany S. 414]
The Committee on Banking, Housing, and Urban Affairs, to
which was referred the bill (S. 414) to amend the Consumer
Credit Protection Act, to ban abusive credit practices, enhance
consumer disclosures, protect underage consumers, and for other
purposes, having considered the same, reports favorably thereon
with an amendment and recommends that the bill as amended do
pass.
INTRODUCTION
The Committee on Banking, Housing, and Urban Affairs met in
open session on March 31, 2009, and ordered S. 414, the
``Credit Card Accountability Responsibility and Disclosure Act
of 2009,'' as amended, favorably reported to the Senate for
consideration.
HEARING RECORD AND WITNESSES
On Thursday, January 25, 2007, the Committee held a hearing
entitled ``Examining the Billing, Marketing and Disclosure
Practices of the Credit Card Industry, and Their Impact on
Consumers.'' At that hearing, the Committee heard testimony
from Elizabeth Warren, Leo Gottleib Professor of Law, Harvard
Law School; Michael Donovan, Esq., Donovan & Searles; Carter
Franke, Executive Vice President of Marketing, JP Morgan Chase
& Co.; Robert Manning, Professor of Finance, Rochester
Institute of Technology; John Finneran, President of Corporate
Reputation and Governance, CapitalOne Financial; Tamara Draut,
Director, Economic Opportunity Programs, Demos; Richard Vague,
CEO, Barclaycard USA; and Travis Plunkett, Legislative
Director, Consumer Federation of America.
On February 12, 2009, the Committee heard testimony from
Travis Plunkett, Legislative Director, Consumer Federation of
America; James Sturdevant, Esq., The Sturdevant Law Firm; Ken
Clayton, Sr. VP & General Counsel, Card Policy Council,
American Bankers Association; Lawrence Ausubel, Professor of
Economics, University of Maryland; Todd Zywicki, Professor,
George Mason University School of Law; and Adam J. Levitin,
Associate Professor of Law, Georgetown University Law Center,
at its hearing on ``Modernizing Consumer Protection in the U.S.
Financial Regulatory System: Strengthening Credit Card
Protections.''
PURPOSE AND SUMMARY OF THE LEGISLATION
The ``Credit Card Accountability Responsibility and
Disclosure Act of 2009'' was developed to implement needed
reforms and help protect consumers by prohibiting various
unfair, misleading and deceptive practices in the credit card
market.
The bill contains numerous provisions which provide
protection to consumers from unreasonable interest rate
increases. The bill prohibits retroactive rate increases on
existing balances, and requires creditors to provide a written
notice of any rate increase at least 45 days before the
increase takes effect. The bill protects consumers from rate
increases based on information not related to the consumer's
behavior with regard to the credit card account. The bill
prevents interminable penalty rates by requiring issuers to
lower penalty rates that have been imposed on a cardholder
after 6 months if the cardholder commits no further violations.
The bill also extends to consumers the right to cancel an
account with the opportunity to repay the balance under
existing terms.
The bill also provides a number of protections from
unreasonable credit card fees. The bill restricts over-limit
fees, and permits consumers to request a fixed credit limit in
order to prevent such fees. The bill also limits currency
exchange fees, and bans fees on interest-only balances. The
bill ensures that interest on credit card balances is computed
in a fair manner, and requires creditors to allocate payments
towards balances with higher rates first.
The legislation enhances the supervision of credit card
issuers and the transparency of their practices and includes
measures that seek to protect consumers against misleading use
of terms in credit card statements and solicitations. Among
other provisions, the bill establishes a single definition of
the terms ``fixed'' and ``prime'' with regard to interest
rates, and requires additional disclosure of minimum payment
information, including the total interest incurred if only
minimum payments were made. The bill also gives consumers more
time to make their payments by requiring creditors to provide
consumers with a reasonable time to pay off the balance and to
send periodic statements to consumers no less than 25 days
before the due date.
The bill provides that no gift cards or prepaid general-use
cards be sold with an expiration date of less than five years,
and generally prohibits dormancy, inactivity, and service
charges and fees on any such card.
The bill also limits the marketing of credit cards to
individuals under age 21. Under this legislation, credit card
issuers would be unable to make pre-screened credit card
solicitations to individuals under age 21 unless the consumer
expressly opted into receiving these solicitations. Extension
of credit to consumers under 21 would be limited to those
circumstances where the consumer could demonstrate an
independent means to repay obligations under the card
agreement, the consumer had the signature of a parent or
guardian indicating joint liability for the consumer's debts on
the account, or the consumer had completed an approved
financial literacy course.
The legislation further strengthens protections for
consumers by increasing existing penalties for credit card
companies that violate the Truth in Lending Act.
Additionally, the bill will provide for additional data
collection from credit card issuers to enhance oversight and
regulation. The bill also amends the Federal Trade Commission
Act to provide each federal banking agency the authority to
prescribe regulations governing unfair or deceptive practices
with respect to the depository institutions it supervises.
The bill requires that the GAO conduct a study of credit
card interchange fees and a study of the advisability of
establishing a Credit Card Safety Rating Commission.
BACKGROUND AND NEED FOR LEGISLATION
Revolving consumer credit in the United States has more
than quadrupled over the past two decades, from $238.6 billion
in December 1990 to a peak of $977 billion in September
2008.\1\ Over the same period, households' credit card debt
also increased significantly. Today, nearly 75 percent of
American households have a general-purpose credit card,
compared to only 16 percent of households in 1970.\2\ In the
current economic downturn, households are increasingly using
credit cards for routine expenses.
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\1\Federal Reserve Statistical Release G.19: Consumer Credit
Outstanding (Historical). Available at: http://www.federalreserve.gov/
releases/g19/hist/cc_hist_sa.html
\2\Thomas A. Durkin. ``Credit Cards: Use and Consumer Attitudes,
1970-2000.'' Federal Reserve Bulletin, September 2000 (Vol. 86 Issue
9); Brian K. Bucks et al., ``Changes in U.S. Family Finances from 2004
to 2007: Evidence from the Survey of Consumer Finances.'' Federal
Reserve Bulletin, February 2009 (Vol. 95).
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As usage of credit cards has grown, the variety of fees and
practices has also increased. As the GAO mentioned in its 2006
report on credit card disclosures, ``After 1990, card issuers
began to introduce cards with a greater variety of interest
rates and fees, and the amounts that cardholders can be charged
have been growing.''\3\ GAO's analysis found that some issuers
charged up to three different interest rates for different
types of transactions; penalty fees that more than doubled
since 1990; penalty rates above 30 percent; and various new
fees for foreign currency exchange, bill payment by telephone,
cash advances, and balance transfers that were not necessarily
incorporated in written disclosures. The six largest credit
card issuers, who represent above three-quarters of the credit
card market, earned approximately $7.4 billion in revenue in
2005 from over-limit and late payment fees alone.\4\ In 2008,
penalty rates averaged 16.9 percentage points above the
standard rate, more than doubling from an 8.1 percentage point
difference between standard and penalty rates in 2000.\5\ Among
28 popular credit cards, the average late fee rose to $34 in
2005, up from about $13 in 1995, and average fees charged for
exceeding a credit limit more than doubled to $31 a month from
$13.\6\
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\3\Government Accountability Office, Credit Cards: Increased
Complexity in Rates and Fees Heightens Need for More Effective
Disclosures to Consumers. GAO-06-929, at 5.
\4\Government Accountability Office, Credit Cards: Increased
Complexity in Rates and Fees Heightens Need for More Effective
Disclosures to Consumers. GAO-06-929, at 72.
\5\Joshua M. Frank. ``Priceless or Just Expensive? The Use of
Penalty Rates in the Credit Card Industry.'' Center for Responsible
Lending, December 16, 2008.
\6\Government Accountability Office, Credit Cards: Increased
Complexity in Rates and Fees Heightens Need for More Effective
Disclosures to Consumers. GAO-06-929, at 5.
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These penalties are contributing to the significant credit
card debt under which American consumers increasingly find
themselves buried. Evidence shows that consumers are struggling
under the large amounts of credit card debt they have amassed.
The average household that carries a credit card balance owes
close to $10,000 in revolving debt on their credit cards.\7\
The amount of credit card debt paid off by Americans monthly,
is now at one of the lowest levels ever recorded.\8\ Thirty-day
credit card delinquencies are now at their highest point in six
years, since the last economic recession ended.\9\ Personal
bankruptcies have increased while the average savings rate is
going down.
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\7\http://www.cardtrak.com/questions/Average_Family_Debt, visited
April 29, 2009.
\8\Chu, Kathy, ``November Credit-Card Payoff Rate Fell Sharply,''
USA Today, February 8, 2009. The monthly payment rate fell by 2.5
percentage points to 16.1 percent in November 2008, according to
CardTrak.com.
\9\30-day credit card delinquencies during first three quarters of
2008 were between 4.79 and 4.88 percent, the highest levels since 2002.
Federal Reserve Board, ``Charge-Off and Delinquency Rates on Loans and
Leases at 100 Largest Commercial Banks'' ``U.S. Credit Card
Delinquencies at Record Highs--Fitch,'' Reuters, February 4, 2009.
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The increase in fees and rates and increase in consumer
debt load have come at a time when credit card issuers are
increasingly engaging in ``risk-based'' pricing, where issuers
charge certain consumers more to cover potential losses,
usually in the form of higher interest rates. Issuers have
argued that risk-based pricing is beneficial to consumers by
allowing issuers to provide greater access to credit as the
decision to grant credit has expanded significantly beyond a
simple ``yes or no'' decision for lenders. Card issuers contend
that the new pricing models enable them to offer cards to more
individuals and charge lower interest rates to those with
better credit scores. In response, consumer advocates have
questioned whether pricing is truly based on the risk posed by
the consumer. They have argued that the fees and penalty
pricing that have evolved from the risk-based pricing
environment are intended primarily to increase fee income, and
contend that risk-based pricing generally works to consumers'
detriment. As issuers' usage of fees and penalty pricing has
increased, they have come under more scrutiny for engaging in
the following practices:
Universal default
One of the most common consumer credit card complaints
involves the practice by which card issuers increase the rate
on a credit card account not because of the cardholder's
payment history with the card, but because of unrelated
information, a practice known as universal default. Under
universal default, consumers can make their credit card payment
on time every month, but see their interest rate increase
because the issuer has determined that their risk profile has
increased. Issuers may apply universal default rate increases
as a result of a consumer's late payment on another account,
such as a different credit card, a mortgage or car payment, or
a utility bill.\10\ Further, under current law issuers may
apply universal default rate increases when a consumer doesn't
pay late at all, but rather when the issuer has determined that
there has been a change in the consumer's risk profile because
he or she has taken out a new loan or utilized more of his or
her available credit.
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\10\Bennish, Steve, ``Credit Reporting Policy Helps Most Customers,
DP&L Says,'' Dayton Daily News, February 26, 2009.
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Issuers argue that this practice is necessary to allow
issuers to price consumers' accounts according to the
consumer's overall risk profile. Consumer advocates contend
that this practice is unfair because it allows issuers to raise
rates even on cardholders who have always paid on time and have
consistently met the terms of their contract, for reasons
unrelated to the consumer's behavior, such as changes in market
conditions. They further note that when a penalty rate is
triggered by the cardholder's behavior, there is no limit on
how long the increased rate will last.
The Credit CARD Act prohibits this practice by permitting
issuers to raise interest rates on cardholders only in response
to a specific, material violation of the card agreement by the
issuer. In addition, the bill would require issuers to lower
penalty rates that have been imposed on a cardholder after 6
months if the cardholder meets the obligations of the credit
card terms.
Unilateral change in terms/``Any Time, Any Reason'' Provisions
In addition to the rate increases based on universal
default, many credit card issuers include clauses in their
contracts allowing credit card issuers to raise rates and
change terms on their credit card customers at any time for any
reason. According to a 2008 survey by Consumer Action, 77
percent of credit card issuers reserve the right to increase a
consumer's interest rate on both prospective balances and on
consumers' pre-existing balances under ``any time, any reason''
clauses. This practice is prohibited by the Credit CARD Act,
which prevents issuers from changing the terms of a credit card
contract for the length of the card agreement, with limited
exceptions.
Retroactive interest rate increases
Currently, when a credit card issuer raises a cardholder's
interest rate, this increased rate is applied not only to the
purchases that the consumer will make in the future, but also
to the balances that the consumer has already incurred at a
lower rate, with the effect that an existing credit card debt
which the consumer may have been paying on time costs
significantly more to repay. Issuers contend that the ability
to raise interest rates on cardholders is necessary to ensure
that they are able to price for increased risk by the
cardholder. Consumer advocates argue that this retroactive
application of rate increase is unfair, and is not justified by
the risk to the issuer since cardholders' rates can be raised
even when they have consistently met their obligations under
the card contract. The CARD Act will prohibit retroactive
interest rate increases, and require that interest rate
increases apply only to future debt.
Allocation of payments
Card companies impose multiple interest rates for various
types of transactions (e.g., balance transfers, ordinary
purchases, and cash advances). When the cardholder makes a
payment, industry practice is to apply the monthly payment
first to the balance with the lowest APR, while letting the
higher interest balance collect more interest and more debt.
Under this method of payment allocation, the cardholder is
prevented from paying off his or her higher rate balance until
the balance with the least expensive rate is paid off,
maximizing the amount of interest that the consumer pays. One
result of this method of allocation is that consumers do not
receive the full benefit of lower promotional interest rates
because a consumer can never take full advantage of lower
promotional rates while still using the card.\11\ The CARD Act
requires payments to be credited to the highest balance first,
and to be applied in a way that minimizes finance charges.
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\11\For example: A consumer uses a convenience check sent in the
mail, promising 0% for 12 months, to purchase a $9000 car. She also
makes $300 in purchases, which carry a 12% APR. There is no way for the
consumer to make payment on the $300 since any payment would first be
applied to the $9000 carrying a 0% rate.
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Misleading prescreened offers of credit
Prescreened credit card solicitations often target people
with blemished or no credit card histories with offers for
credit cards that have low interest rates and high ``up to''
credit limits that exceed what the consumer is likely to
qualify for and receive. Consumers who receive these
solicitations that prominently advertise very low interest
rates and high credit limits believe that when they apply, they
will receive a credit card reflecting these advertised rates
and limits. Ultimately, however, these consumers receive cards
that have less attractive terms and features than the card for
which they applied, including higher interest rates and lower
credit limits. A consumer who is offered one rate or a range of
rates, and receives a card at the high end of that range
effectively cannot decline the card and start the process over
with another card company without penalty, because multiple
credit requests can depress the consumer's credit score,
thereby affecting the consumer's ability to obtain another card
at a competitive rate. The CARD Act would allow cardholders to
reject a card until they activate it without having their
credit adversely affected.
Unreasonable and excessive fees
An analysis by the United States Government Accountability
Office (GAO) found that ``typical cards today now include
higher and more complex fees than they did in the past for
making late payments, exceeding credit limits, and processing
returned payments.''\12\ For example, credit card issuers in
the past rejected transactions that exceeded a cardholder's
credit limit, but it has now become common practice for issuers
to accept the transaction and then apply an overlimit fee on
cardholders who exceed their credit limits. In addition, the
GAO found that late fees have been steadily rising over the
past decade, averaging $34 per incident in 2005.
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\12\``Credit Cards: Increased Complexity in Rates and Fees
Heightens Need for More Effective Disclosures to Consumers,'' U.S.
Government Accountability Office, September 2006, p. 18.
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The Credit Card Act will help put an end to unreasonable
penalty fees. For example, the Act prohibits issuers from
charging a fee to allow a consumer to pay a credit card debt,
whether payment is by mail, telephone, electronic transfer, or
otherwise. With respect to overlimit fees, the Act prevents
issuers from charging multiple overlimit fees for exceeding a
card limit, and allows such fees only when a cardholder's
action, rather than a fee or finance charge, causes the limit
to be exceeded. The Act also permits overlimit charges to be
applied only once during a billing cycle. The CARD Act further
addresses fees by requiring that the penalty fees charged to
cardholders be reasonably related to the issuers' costs, and by
requiring that currency exchange fees be reasonable. The
Committee understands that the Federal Reserve Board, in
determining reasonable relation to cost, will take into account
a number of factors, including; costs associated with
individual transactions; costs of managing the portfolio;
credit risk associated with both the portfolio and the
individual; the conduct of the cardholder; and circumstances
leading to such omission or violation; and such other factors
as the Board may deem appropriate.
Unfair methods of computing finance charges
Issuers use different methods for computing finance charges
on balances that have already been paid on time. These methods
are difficult for consumers to understand and can result in
substantial additional finance charges on a cardholder over the
course of a year. Under the double cycle billing method of
computing finance charges, an issuer considers not only the
current balance on the credit card, but also the balance from
previous billing periods in assessing interest on a consumer's
balance. This method results in a consumer paying more interest
on the current outstanding balance on the card. In addition to
double cycle billing, issuers use interest computation
practices to charge consumers interest on the portion of
balances repaid during a grace period, when the consumer pays
some but not all of the outstanding balances. Using this
method, a consumer who begins with no balance from the previous
billing cycle (month 1) and then pays off a portion of the
current balance (month 2), would be charged interest (in month
3) for the entire amount of the balance, even the portion that
was paid (in month 2) .
The Card Act would address these practices by preventing
issuers from requiring consumers to pay interest on portions of
debt already repaid, helping to ensure a fair billing process
that only results in an interest charge on the amount of the
unpaid balance. The Act would require finance charges on
outstanding credit card balances to be computed based on
purchases made in the current cycle rather than going back to
the previous billing cycle to calculate interest charges.
Minimal notice and lack of disclosure
The large volume of the card industry's solicitations is
exacerbated by the confusing complexity of those solicitations.
It is common industry practice to use promotional interest
rates to attract customers and to induce new and existing
customers to transfer balances from other credit cards. Direct
mail solicitations prominently display low interest rates to
lure consumers but often fail to fully or prominently disclose
the fact that the low rate is for a limited period of time,
that circumstances exist that could shorten the promotional
period or cause the promotional interest rate to increase, or
that there may be fees associated with transferring balances to
lower interest rate cards. In addition, credit card issuers are
currently required to mail notices only 15 days in advance of a
proposed increase in interest rate, with the result that
consumers have very little opportunity to avoid the increased
interest rate and thus face significant additional interest
payments without advance notice.
The Act makes a number of changes to enhance consumer
disclosures. It requires issuers to provide 45 days advance
notice of interest rate increases, and grants cardholders the
right to cancel the card and pay it off under the old terms.
Aggressive marketing to students
Credit card issuers engage in extensive marketing on
college campuses with offers of easy credit to students and
encourage them to obtain and use credit cards without verifying
the student's ability to repay the resultant debt. In contrast,
if any other adult applies for a credit card, an issuer
generally verifies the consumer's ability to pay by checking
their credit history and obtaining information about the
applicant's income. A consumer with a less positive credit
history or lack of income either gets a lower limit, higher
interest rate card or is required to have a co-signer. An even
less creditworthy consumer would be denied, or required to
obtain a secured credit card.
The CARD Act requires credit card issuers to consider
ability to repay when issuing credit cards to students and
other young consumers. The Act requires that credit card
issuers, when extending credit to persons under the age of 21,
obtain an application that contains: (1) the signature of a
parent, guardian, or other qualified individual willing to take
financial responsibility for the debt; (2) information
indicating an independent means of repaying any credit
extended; or (3) proof that the applicant has completed a
certified financial literacy or financial education course.
CREDIT CARD FINAL RULES
In the face of evidence that disclosure was insufficient to
protect consumers from many abusive practices,\13\ the Federal
Reserve Board, Office of Thrift Supervision and the National
Credit Union Administration finalized rules to prohibit unfair
or deceptive practices regarding credit cards and overdraft
services in December of 2008. The Agencies exercised their
authority under the Federal Trade Commission Act to prescribe
regulations to end certain unfair or deceptive credit card
practices under Regulation AA (Unfair Acts and Practices).
During the comment period, the public responded to the proposed
rules with an unprecedented number of comments--over 66,000--
submitted to the agencies.
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\13\In 2006, the Government Accountability Office (GAO) found that
current ``disclosures have serious weaknesses that likely reduced
consumers' ability to understand the costs of using credit cards''
because they were too complicated for many consumers to understand.
Government Accountability Office, Credit Cards; Increased Complexity in
Rates and Fees Heightens Need for More Effective Disclosures to
Consumers 6 (2006).
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Among other provisions, the rules include the following
credit card protections for consumers:
(1) Credit card issuers will be prohibited from increasing
the rate on a preexisting credit card balance. Exceptions to
this provision are provided for: rate increases linked to an
increase in an underlying index on a variable-rate card; the
expiration of a specified promotional period provided that the
higher rate was disclosed at account opening; the cardholder's
failure to comply with the terms of a workout or temporary
hardship arrangement; and 30-day delinquency by the cardholder.
(2) Issuers will be prohibited from allocating payments in
excess of the minimum in a manner that maximizes interest
charges.
(3) Issuers will be prohibited from imposing interest
charges using the ''double-cycle'' method, which computes
interest on balances on days in billing cycles preceding the
most recent billing cycle.
(4) Issuers will be required to provide consumers a
reasonable amount of time to make payments, with statement
mailing or delivery 21 days prior to the due date considered a
``safe harbor.''
(5) Issuers would be prohibited from financing security
deposits and fees for credit availability (such as account-
opening fees or membership fees) if charges assessed during the
first 12 months would exceed 50 percent of the initial credit
limit.
The Agencies also exercised their authority under the Truth
in Lending Act to prescribe regulations on consumer disclosures
in credit card solicitations, applications, and statements
under Regulation Z. These regulations were proposed after
consumer testing which included a series of focus groups as
well as interviews with 1,022 participants in seven cities.
Final rules under Regulation Z include the following
requirements:
(1) Application and solicitation disclosures will be
required to include the actions that would trigger a ``penalty
APR'' along with the resulting penalty rate and the possibility
of that rate to expire. The potentially confusing terms
``default rate'' and ``grace period'' will not be permitted.
(2) Account opening disclosures will be required to include
interest fees, minimum charges, transaction fees, annual fees,
and penalty fees.
(3) Periodic statement disclosures will be required to
group together interest charges and fees, itemized by
transaction type, with year-to-date totals. Payment due dates
and the consequences of a late payment would be required on the
front of each statement.
(4) Advance notice for interest rate increases or other
changes in terms will increase to a minimum of 45 days.
Currently, the rules permit either immediate increases, or a
minimum of 15 days advance notice, depending on actions
triggering the change.
(5) Cut-offs for accepting payments will be established at
a ``reasonable time,'' no earlier than 5 p.m., with Sunday/
holiday due dates postponed to the next business day for
payments made by mail.
It is the view of the Committee that these rules are an
important first step in curbing some of the most abusive
practices engaged in by credit card issuers. But there are a
number of additional areas described in this report where
Congress needs to act to ensure that consumers are adequately
protected in the credit card marketplace. In addition, the
rules do not take effect and thus leave consumers unprotected
until July 1, 2010.
SECTION-BY-SECTION ANALYSIS
Section 1. Short title
This section establishes the short title of the bill, the
``Credit Card Accountability Responsibility and Disclosure
Act,'' and provides a table of contents.
Section 2. Regulatory authority
This section authorizes the Board of Governors of the
Federal Reserve System (the Board) to issue rules and publish
model forms as it considers necessary to carry out the Act and
the amendments made by the Act.
Section 3. Effective date
This section provides an effective date of 9 months after
passage of the Act.
TITLE I--CONSUMER PROTECTION
Section 101. Prior notice of rate increases required
This section prevents issuers from increasing interest
rates on cardholders without 45 days' notice, and prohibits
issuers from applying rate increases retroactively to existing
balances. This section also requires issuers to provide
cardholders with a clear notice of the cardholders' right to
cancel the credit card when the interest rate is raised.
Section 102. Freeze on interest rate terms and fees on canceled cards
This section prevents issuers from increasing the interest
rate on a cardholder, or changing the terms of a credit card,
if a cardholder cancels a card.
Section 103. Limits on fees and interest charges
This section prohibits credit card issuers from imposing
interest charges on any portion of a balance that is paid by
the due date.
Under this section, cardholders must be given the option of
having a fixed credit limit that cannot be exceeded, and card
companies are prohibited from charging overlimit fees on
cardholders with fixed limits. Cardholders may elect to
prohibit their issuers from completing overlimit transactions
that will result in a fee or constitute a default under the
credit agreement. Overlimit charges can only be charged when an
extension of credit, rather than a fee or interest charge,
causes the credit limit to be exceeded, and can only be applied
once during a billing cycle.
This section prohibits issuers from charging interest on
credit card transaction fees, such as late fees and overlimit
fees.
This section prohibits credit card issuers from charging a
fee to allow a credit card holder to pay a credit card debt,
whether payment is by mail, telephone, electronic transfer, or
otherwise. This section requires that penalty fees assessed to
cardholders be reasonably related to the cost incurred by the
issuer. Under this section, foreign currency exchange fees may
only be imposed in an account transaction if the fee reasonably
reflects costs incurred by the creditor and the creditor
publicly discloses its method for calculating the fee.
Section 104. Consumer right to reject card before notice is provided of
open account
This section prohibits creditors from reporting the
issuance of any credit card to a credit reporting agency until
the cardholder uses or activates the card.
Section 105. Use of terms clarified
This section prevents card companies from using the terms
``fixed rate'' and ``prime rate'' in a misleading way by
establishing a single definition.
Section 106. Application of card payments
This section prohibits credit card companies from setting
early deadlines for credit card payments. The section requires
payments to be applied first to the credit card balance with
the highest rate of interest, and to minimize finance charges.
The section prohibits late fees if the card issuer delayed
crediting the payment. In addition, this section prohibits card
companies from charging late fees when a cardholder presents
proof of mailing payment within 7 days of the due date.
Section 107. Length of billing period
This section requires credit card statements to be mailed
21 days before the bill is due.
Section 108. Prohibition on universal default and unilateral changes to
cardholder agreements
This section prevents credit card issuers from increasing
interest rates on cardholders for reasons unrelated to the
cardholder's behavior with respect to that card. In addition,
it prevents credit card issuers from changing the terms of a
credit card contract for the length of the card agreement. The
section allows penalty rate increases only for specific,
material actions or omissions of the consumer specified in the
card agreement. Lastly, this section requires issuers to lower
penalty rates that have been imposed on a cardholder after 6
months if the cardholder commits no further violations.
Section 109. Enhanced penalties
This section increases existing penalties for companies
that violate the Truth in Lending Act with respect to credit
card customers.
Section 110. Enhanced oversight
This section requires a credit card issuer's primary
regulator to evaluate the credit card policies and procedures
of card issuers to ensure compliance with credit card
requirements and prohibitions. Improves existing data
collection efforts related to credit card interest rates, fees,
and profits.
Section 111. Clerical amendments
This section makes clerical corrections to the Truth in
Lending Act.
TITLE II--ENHANCED CONSUMER DISCLOSURES
Section 201. Payoff timing disclosures
This section requires credit card issuers to provide
individual consumer account information and to disclose the
period of time it will take the cardholder to pay off the card
balance if only minimum monthly payments are made. Under this
section, issuers are required to disclose the total amount of
interest the cardholder will pay in order to pay off the card
balance if only minimum monthly payments are made. This section
also requires issuers to provide a toll-free number for use by
the consumer to receive information about accessing credit
counseling and debt management services.
Section 202. Requirements relating to late payment deadlines and
penalties
This section requires full disclosure in billing statements
of required payment due dates and applicable late payment
penalties. It further requires that cardholders be given a
reasonable period to make payment, and that payment at local
branches be credited same-day.
Section 203. Renewal disclosures
This section requires card issuers to provide a full set of
account disclosures to cardholders upon card renewal when the
terms of the card have changed.
TITLE III--PROTECTION OF YOUNG CONSUMERS
Section 301. Extensions of credit to underage consumers
This section requires that credit card issuers, when
extending credit to persons under the age of 21, obtain an
application that contains either: (1) the signature of a
parent, guardian, other qualified individual willing to take
financial responsibility for the debt; (2) information
indicating an independent means of repaying any credit
extended; or (3) proof that the applicant has completed a
certified financial literacy or financial education course.
Section 302. Restrictions on certain affinity cards
This section mandates that credit card issuers, as a
condition for entering into commission-based affinity cards
with higher education institutions, require that all affinity
card customers under the age of 21, comply with the
requirements listed above.
Section 303. Protection of young consumers from prescreened offers of
credit
This section prohibits consumer reporting agencies from
furnishing reports in connection with firm offers of credit or
insurance that are not initiated by consumers under age 21.
This section also allows consumers who are at least 18, but not
yet 21, to elect, in writing, to have their names and addresses
included in any list of names provided by such agencies in
connection with such transactions.
Section 304. Issuance of credit cards to certain college students
This section requires parental approval to increase credit
lines on accounts where the parent is jointly liable.
TITLE IV--FEDERAL AGENCY COORDINATION
Section 401. Inclusion of all Federal banking agencies
This section amends the Federal Trade Commission Act to
authorize each federal banking agency to prescribe regulations
governing unfair or deceptive practices with respect to the
institutions they supervise. Existing authority is limited to
the Federal Reserve Board, the Office of Thrift Supervision,
and the National Credit Union Administration. This section
would extend this authority to the Office of the Comptroller of
the Currency and the Federal Deposit Insurance Corporation.
The section requires the federal banking agencies to
prescribe such regulations: (1) jointly to the extent
practicable; and (2) in consultation with the Federal Trade
Commission (FTC). Under this section, the Comptroller General
is instructed to report to Congress on the status of
regulations by the federal banking agencies and the NCUA
regarding unfair and deceptive acts or practices by depository
institutions.
Nothing in this section is intended to affect the scope of
the authority granted to the financial regulators under the FTC
Act, nor is the section intended to affect in any way the
authority of the FTC. Nothing in this section is intended to
affect the applicability of state unfair and deceptive
practices laws to federally chartered institutions.
TITLE V--GIFT CARDS
Section 501. Definitions
This section defines terms including ``gift card,'' ``gift
certificate'' and ``general-use prepaid card.''
Section 502. Unfair or deceptive acts or practices regarding gift cards
This section makes it unlawful for any person to impose a
dormancy fee, inactivity charge or fee, or a service fee with
respect to a gift certificate, store gift card, or general-use
prepaid card. This section further provides that it is unlawful
to sell or issue a gift certificate, gift card or general-use
prepaid card that is subject to an expiration date of less than
5 years. An exception is provided allowing fees of not more
than $1 for reloadable cards or certificates with less than $5
in value that have been inactive for over 24 months.
Section 503. Relation to state laws
This section states that this title shall not supersede any
provisions of State law with respect to dormancy fees,
inactivity charges or fees, service fees, or expiration dates
of gift certificates, store gift cards, or general-use prepaid
cards.
Section 504. Enforcement
This section makes this title enforceable under section
18(a)(1)(B) of the Federal Trade Commission Act.
TITLE VI--MISCELLANEOUS PROVISIONS
Section 601. Study and report on interchange fees
This section requires the Comptroller General of the GAO to
conduct a study on interchange fees and their effects on
merchants and consumers, and to report the findings to Congress
in 180 days.
Section 602. Study and report on credit card rating system
This section requires the Comptroller General of the GAO to
establish a Credit Card Safety Rating Commission that will
determine whether a rating system to allow cardholders to
quickly assess the level of safety of credit card agreements
would be beneficial to consumers, and to make recommendations
to Congress concerning how such a system should be devised.
Section 603. Increased borrowing authority of the FDIC and the NCUA
This section increases the maximum borrowing authority of
the Federal Deposit Insurance Corporation from $30 billion to
$100 billion and of the National Credit Union Administration
from $100,000,000 to $6 billion.
This section further authorizes a temporary increase in
borrowing authority through calendar year 2010 up to a maximum
of $500 billion for the FDIC and $18 billion for the NCUA, if
the Secretary of the Treasury, in consultation with the
President, determines that additional amounts are necessary,
pursuant to the written recommendation of the Federal Reserve
Board and either the FDIC Board or the NCUA Board,
respectively.
Additionally, this section requires that the NCUA Board
establish a restoration plan for the Share Insurance Fund when
the Board determines that the equity ratio of the Fund will
fall below 1.2%, the minimum equity level required by statute.
REGULATORY IMPACT STATEMENT
In accordance with paragraph 11(b), rule XXVI, of the
Standing Rules of the Senate, the Committee makes the following
statement concerning the regulatory impact of the bill.
The ``Credit Card Accountability Responsibility and
Disclosure Act of 2009'' modifies the Truth in Lending Act to
prohibit certain practices by credit card issuers, and to
require that they provide additional disclosures to borrowers.
The bill requires the Federal Reserve Board to issue
regulations to implement the Act.
The bill modifies the Federal Trade Commission Act to give
each federal banking agency, with respect to the depository
institutions it supervises, the authority to prescribe
regulations governing unfair or deceptive practices.
The bill also modifies the Federal Deposit Insurance Act
and the Federal Credit Union Act.
The bill has no discernible impact on personal privacy. The
bill is not expected to result in substantial additional
paperwork.
COST OF THE LEGISLATION
April 24, 2009.
Hon. Christopher J. Dodd,
Chairman, Committee on Banking, Housing, and Urban Affairs,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 414, the Credit Card
Accountability Responsibility and Disclosure Act of 2009.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Kathleen
Gramp and Leigh Angres (federal deposit insurance), Barbara
Edwards (revenues), and Jacob Kuipers (private-sector
mandates).
Sincerely,
Douglas W. Elmendorf.
Enclosure.
S. 414--Credit Card Accountability Responsibility and Disclosure Act of
2009
Summary: S. 414 would amend the Truth in Lending Act to
restrict the use of a number of billing practices applied to
consumer credit cards. S. 414 would direct the Board of
Governors of the Federal Reserve System (Federal Reserve), in
consultation with other financial regulatory agencies, to issue
regulations implementing the new standards. The Federal Reserve
also would be required to annually report to the Congress about
certain profitability measures on the credit card operations of
depository institutions. Finally, the bill would establish a
commission to study the feasibility of instituting a rating
system to reflect the riskiness of credit card agreements.
S. 414 also would make changes to the insurance funds
administered by the Federal Deposit Insurance Corporation
(FDIC) and the National Credit Union Administration (NCUA). The
bill would increase the amounts that the FDIC and NCUA can
borrow from the Treasury for their deposit insurance funds. S.
414 also would allow NCUA to lengthen the amount of time
available to impose industry assessments for the purpose of
replenishing its insurance fund.
CBO estimates that enacting S. 414 would increase direct
spending by $1.4 billion over the 2010-2014 period and reduce
direct spending by $500 million over the 2010-2019 period. We
estimate that implementing S. 414 would increase discretionary
spending by $9 million over the 2010-2014 period, assuming
appropriation of the estimated amounts. CBO estimates that
enacting the bill would not have a significant effect on
revenues.
The effects on direct spending over the 2009-2013 and 2009-
2018 periods are relevant for enforcing the Senate's pay-as-
you-go rule under the current budget resolution. CBO estimates
that enacting S. 414 would increase direct spending by $2.5
billion over the 2009-2013 period and reduce direct spending by
$500 million over the 2009-2018 period. Enacting S. 414 would
not have a significant effect on revenues over those time
periods. Pursuant to Section 311 of S. Con. Res. 70, CBO
estimates that S. 414 would not cause a net increase in
deficits in excess of $5 billion in any of the four 10-year
periods beginning after fiscal year 2018.
S. 414 contains no intergovernmental mandates as defined in
the Unfunded Mandates Reform Act (UMRA) and would impose no
costs on state, local, or tribal governments.
S. 414 contains several private-sector mandates, as defined
in UMRA. The bill would require creditors to submit detailed
information on a semiannual basis to the Federal Reserve and
prohibit them from engaging in certain credit card billing and
issuing practices. The bill also would prohibit issuers of gift
cards from collecting certain fees or establishing expiration
dates. Based on information from the Federal Reserve and
industry sources, CBO estimates that the aggregate cost of
those requirements would likely exceed the annual threshold
established in UMRA for private-sector mandates ($139 million
in 2009, adjusted annually for inflation) in at least one of
the first five years the mandates are in effect.
Estimated cost to the Federal Government: The estimated
impact of enacting S. 414 is shown in the following table. The
costs of this legislation fall within budget functions 370
(commerce and housing credit) and 800 (general government).
Basis of estimate: For this estimate, CBO assumes that S.
414 will be enacted near the end of fiscal year 2009.
Direct spending
CBO estimates that enacting S. 414 would increase direct
spending by $1.4 billion over the 2010-2014 period, but would
reduce direct spending by $500 million over the 2010-2019
period as a result of changes related to federal deposit
insurance programs.
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-------------------------------------------------------------------------------------------------------------------------
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2010-2014 2010-2019
--------------------------------------------------------------------------------------------------------------------------------------------------------
CHANGES IN DIRECT SPENDING\1\
Increase FDIC Borrowing
Authority:
Estimated Budget Authority 0 0 0 0 0 0 0 0 0 0 0 0
Estimated Outlays......... 7,700 -2,160 -2,310 -1,330 -860 -820 -630 -30 0 0 1,040 -440
Lengthening Time to Restore
the SIF:
Estimated Budget Authority 0 0 0 0 0 0 0 0 0 0 0 0
Estimated Outlays......... 1,460 -260 -280 -290 -310 -290 -90 0 0 0 320 -60
Total Changes:
Estimated Budget 0 0 0 0 0 0 0 0 0 0 0 0
Authority............
Estimated Outlays..... 9,160 -2,420 -2,590 -1,620 -1,170 -1,110 -720 -30 0 0 1,360 -500
CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Estimated Authorization Level. 2 2 2 2 2 2 2 2 2 2 10 20
Estimated Outlays............. 1 2 2 2 2 2 2 2 2 2 9 19
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\CBO estimates that enacting S. 414 would have an insignificant effect on revenues over the 2010-2019 period.
Note: FDIC = Federal Deposit Insurance Corporation; SIF = Share Insurance Fund.
Higher Borrowing Limit for FDIC. The bill would provide a
permanent increase in the FDIC's authority to borrow from $30
billion to $100 billion and would provide a temporary increase
of up to $500 billion under certain conditions. Raising the
FDIC's borrowing authority would give the agency more
flexibility in setting the insurance premiums it charges
depository institutions, managing the resolution of failed
institutions, and providing alternative forms of assistance to
financial institutions (for example, guaranteeing debt issued
by banks). CBO estimates that such changes would increase net
outlays by about $1 billion over the next five years, but would
result in savings of $440 million over the 2010-2019 period. We
assume that, if this bill is enacted, the FDIC would reduce
certain special assessments on the financial industry that
otherwise would take effect within the next 12 months, resolve
certain cases more quickly, and reduce its reliance on loss-
sharing methods to resolve failed institutions in some
situations.
Changes to National Credit Union Share Insurance Fund
(SIF). The SIF normally provides insurance for deposits of
$100,000 in individual credit unions. (Under Public Law 110-43,
the SIF currently provides insurance up to $250,000 through
December 31, 2009.) SIF is structured to be entirely self-
supporting through the biannual premiums paid by credit unions.
Current law requires that, over the course of the year, the
SIF balance total between 1.2 percent and 1.3 percent of
insured deposits (including amounts credited to the fund from
interest earned on its unspent balances). If the fund balance
(including interest) falls below 1.2 percent of insured
deposits, the NCUA must assess a premium on credit unions. As
of March 2009, the SIF has about $8 billion in fund balances
(1.3 percent of insured deposits).
CBO estimates that the SIF will incur losses totaling about
$7 billion over the next three years. The majority of those
losses will stem from an NCUA program created in January 2009
that provides a temporary guarantee of uninsured deposits at
most corporate credit unions through December 31, 2010. The
remaining losses will result from payments to a corporate
credit union in January 2009 and from other anticipated credit
union failures.
Lengthening the Time to Restore the SIF. S. 414 would
lengthen the amount of time available to restore the fund
balances of the SIF to at least 1.2 percent of insured
deposits. Agency regulations state that the SIF balance must be
restored to at least 1.2 percent of insured deposits within one
year. Under the bill, the SIF balance would have to be at 1
percent within a year, but the restoration from 1 percent to at
least 1.2 percent of insured deposits could be spread out for a
period of up to five years (or longer under extraordinary
circumstances as determined by NCUA).
Under the bill, CBO expects that future SIF premiums would
be paid over seven years given the extraordinary losses the SIF
is expected to incur. Accordingly, CBO estimates that the
agency's net outlays would increase by $320 million over the
2010-2014 period, as losses would exceed premium collections,
but would decrease by about $60 million over the 2010-2019
period, as the remaining premiums would be collected.
Higher Borrowing Limit for NCUA. The legislation also would
increase the SIF's borrowing authority from $100 million to $6
billion and allow for additional borrowing of up to $18 billion
under certain circumstances. Currently, NCUA is using its
borrowing authority through the Central Liquidity Facility
(CLF) to address certain liquidity needs. Based on information
provided by the NCUA, the agency would likely substitute
borrowing from the CLF with borrowing under the bill's
authority. CBO therefore estimates that the increased borrowing
authority would have no net effect on direct spending.
Revenues
The bill would provide more consumer protection for credit
card holders through a number of requirements on credit card
issuers. For example, the bill would require advance
notification to consumers of any rate increases, limits on fees
and interest charges on credit card accounts, longer time
between the mailing of bills and the payment due dates, and
enhanced disclosures regarding payoff timings and penalties.
The bill also would provide more stringent requirements for the
issuance of credit cards to individuals below age 21. The bill
would impose some restrictions on fees charged for gift cards.
The bill would require the Federal Reserve to issue any rules
and model forms, as needed, to implement the requirements of
the bill. To ensure the requirements are uniform for all
financial institutions, the Federal Reserve would need to
coordinate with other financial regulatory agencies.
According to the Federal Reserve and other agencies, the
regulatory activities required by S. 414 would not have a
significant effect on their workload or budgets. In May 2008,
the Federal Reserve proposed a number of regulatory changes
that covered some of the same issues addressed by S. 414 and
issued those regulations in December 2008. The related changes
are scheduled to become effective July 2010. CBO does not
expect the additional data collection and reporting
requirements of the Federal Reserve to have a significant
effect on its workload, and we anticipate that existing
resources would be used to comply with S. 414. The budgetary
effects on the Federal Reserve are recorded as changes in
revenues (governmental receipts). Costs incurred by the other
financial regulatory agencies affect direct spending, but most
of those expenses are offset by fees or income from insurance
premiums. Thus, CBO estimates that enacting this bill would not
significantly affect revenues, and that the regulatory
requirements would have a negligible net effect on direct
spending.
Spending subject to appropriation
S. 414 would establish a commission to determine whether a
rating system for credit card agreements would benefit
consumers, and if so, to recommend ways such a rating system
could be devised. Based on historical spending for similar
activities, CBO estimates that creating the commission would
cost about $9 million over the 2010-2014 period and $19 million
over the 2010-2019 period, assuming appropriation of the
necessary amounts.
Other provisions of S. 414 would require the Federal
Reserve and other financial regulatory agencies to consult with
the Federal Trade Commission when developing regulations to
implement the new standards and require the Government
Accountability Office to undertake two studies and prepare
reports of its findings. The first study, due six months after
enactment of S. 414, would review interchange fees and their
effects on consumers and merchants. The second, due 18 months
after enactment of the bill, would report on the status of
regulations adopted by the financial regulatory agencies
regarding unfair and deceptive acts by depository institutions
and federal credit unions. Taken together, CBO estimates that
those consultation and reporting requirements would cost less
than $1 million per year, assuming the availability of
appropriated funds.
Estimated impact on state, local, and tribal governments:
S. 414 contains no intergovernmental mandates as defined in
UMRA and would impose no costs on state, local, or tribal
governments.
Estimated impact on the private sector: The bill contains
several private-sector mandates, as defined in UMRA,
principally affecting creditors and institutions that issue
gift cards. Mandates on creditors would:
Impose additional reporting requirements;
Place limits on fees and interest charges;
Set standards for issuing credit cards to
individuals under the age of 21; and
Impose requirements on several features of
credit accounts.
The bill also would impose private-sector mandates on
issuers of gift cards by prohibiting them from collecting
certain fees or establishing expiration dates, except as
directed in the bill.
The aggregate costs to comply with those mandates would
likely exceed the annual threshold established in UMRA for
private-sector mandates ($139 million in 2009, adjusted
annually for inflation) in at least one of the first five years
the mandates are in effect.
The bill also would codify several requirements included in
credit card regulations recently established by the Federal
Reserve and other financial regulatory agencies. CBO believes
that action would not constitute a new mandate.
Mandates on creditors
Reporting Requirements. The bill would require the Federal
Reserve to collect additional data from creditors on the
profitability of their credit card operations, the percentages
of income derived from different sources, fees on cardholders,
fees on merchants, and any other specified material sources of
income. Under current law, the Federal Reserve collects
financial data semiannually from a large sample of creditors.
Those data are readily compiled by creditors, and the cost of
submitting the data is minimal. However, according to the
Federal Reserve and industry sources, in order to comply with
the new requirement, creditors would need to develop and
implement new software programs and systems to compile the
necessary data. Based on information from the Federal Reserve
and industry sources, CBO estimates that the mandate would
affect a large number of creditors, and the cost to set up the
systems could be significant.
Limits on Credit Card Fees and Interest Charges. The bill
would place limits on fees and interest charges creditors could
collect. This includes over-the-limit fees, interest charges,
and other fees. The industry currently collects billions of
dollars in such fees and interest charges annually. According
to the Federal Reserve and industry sources, the limits imposed
by the bill could significantly affect the amount that
creditors collect each year.
Over-the-Limit Fees. The bill would require creditors to
allow cardholders to establish a credit limit that cannot be
exceeded, which is known as a hard credit limit. As such,
creditors would be prevented from completing any transaction
that would put the cardholder in excess of their credit limit.
Under current practice, most cardholders are allowed to exceed
their credit limit and are charged a fee for doing so. Under
the bill, creditors would be prohibited from charging over-the-
limit fees on accounts for which the cardholder has requested a
hard credit limit. In addition, the bill would limit the
situations when creditors could charge over-the-limit fees.
Because the bill also would require creditors to notify their
cardholders of the option to establish a credit limit and
provide the necessary tools for cardholders to do so, the
Federal Reserve and industry representatives believe that many
cardholders would elect to use the option.
Credit Card Interest Charges. The bill would impose several
new requirements regarding a creditor's ability to collect
interest charges from credit cards that have been cancelled and
from certain credit card transaction fees. The bill also would
require creditors to apply a cardholder's payment to the
balance with the highest rate of interest to minimize finance
charges.
Credit Card Fees. The bill also would impose limits on the
fees charged to cardholders and when creditors could charge
certain fees.
Standards for Issuing Credit Cards to Individuals Under the
Age of 21. The bill also would require creditors, when
soliciting to persons under the age of 21, to obtain a credit
card application that contains either a guardian's signature,
information indicating an independent income, or proof that the
applicant has completed a certified financial education course.
In addition, a creditor would be prohibited from increasing
such a cardholder's line of credit unless a guardian approves
in writing and assumes joint liability of such increase. A
creditor also would be prohibited from soliciting prescreened
credit offers to individuals under the age of 21. Similarly,
credit-reporting agencies would be prohibited from furnishing
credit-related information to creditors unless explicitly
authorized by the individual. Even though only a small
percentage of cardholders are under the age of 21, creditors
collect hundreds of millions of dollars each year from
cardholders between the ages of 18 and 21. CBO is uncertain
whether the mandates would affect the number of persons under
21 who would acquire credit cards. Therefore, we cannot
determine if the cost of complying with this mandate would be
significant to creditors.
Requirements on Credit Account Features. S. 414 would
impose several new requirements on creditors related to
providing account disclosures, using certain terms, and
activating credit cards. The bill would require creditors to
disclose payment and interest information as well as
termination procedures prominently as described in the bill. In
addition, the bill would prohibit creditors from using the term
``prime rate'' unless its use is based on the definition
provided in the bill and would prohibit creditors from
informing credit bureaus of a cardholder's line of credit until
the cardholder has activated his or her card. The cost for
creditors to comply with those mandates would likely be minimal
because compliance would involve only a small adjustment in
current procedures.
Mandates on issuers of gift cards
S. 414 would prohibit issuers of gift cards from collecting
certain fees and establishing expiration dates for gift
certificates, store gift cards, or general-use prepaid cards
except as allowed by the bill. According to industry sources,
those requirements could significantly affect the amount that
issuers of gift cards collect in fees each year. Currently,
those issuers collect more than $6 billion each year from fees
and expired cards. Even if this provision affected only a small
portion of those fees, the amount of forgone collections by
card issuers could be substantial.
Estimate prepared by: Federal costs: Federal Banking--
Kathleen Gramp and Leigh Angres; Revenues--Barbara Edwards;
Impact on state, local, and tribal governments: Leo Lex; Impact
on the private sector: Jacob Kuipers.
Estimate approved by: Theresa Gullo, Deputy Assistant
Director for Budget Analysis; Frank J. Sammartino, Acting
Assistant Director for Tax Analysis.
CHANGES IN EXISTING LAW (CORDON RULE)
On March 31, 2009 the Committee unanimously approved a
motion by Senator Dodd to waive the Cordon rule. Thus, in the
opinion of the Committee, it is necessary to dispense with the
requirement of section 12 of rule XXVI of the Standing Rules of
the Senate in order to expedite the business of the Senate.