Card Holder's Bill of Rights 2009

May 23^rd 2009

Copyright © 2009

I have recently received many inquiries about this latest federal amendment to the Truth and Lending Act known as “The Credit Cardholder’s Bill of Rights of 2009”.  This amendment is scheduled to become effective in June of 2010.  Many people want to know what this means for credit card holders and this is my opinion after analyzing the industry since 1993 and carefully reviewing the new legislation. 

This new law amends sections of the already existing Truth and Lending Act.  Many attorneys should know whether or not they have a chance to obtain a remedy for their clients under this Act in the past.  The reason I say this is because the amendments include absolutely no penalty provisions, and that leaves the existing penalty provisions to enforce the new legislation.  I will summarize them for you; while the new legislation appears to be pro-consumer at first read, the consumer’s remedy for any violations of the Act is to sue the bank.  That’s right; you have to sue them in state or federal court.  This does little or nothing for consumers but certainly gives attorneys more business. 

Other remedies may be provided by any of the nine federal agencies designated under the Act.  You should already know that these agencies, as a matter of long standing policy, take no action unless large numbers of consumers file similar complaints against one institution over a short period of time. 

And you can certainly forget about any criminal actions against the credit card companies or banks, just like you have witnessed in 2008 and so far this year where the bankers are getting billions in cash from Congress and the Federal Reserve. 

The greatest penalty imposed against any bank is $5,000 and it would cost much more just to get the chance in court of winning this claim.  Imagine if 1,000 consumers filed similar complaints for this across the country and they all won in the same year, it would only cost the banks $5,000,000 and then they would write it off as a loss and pass that onto all the other consumers filing tax returns and using Federal Reserve Notes.  That loss would not be suffered by the banks, it would be absorbed into contributing toward more inflation and consumers would still pay. 

What is more incredible and even outrageous is that five million dollars is nothing when each bank typically has about two hundred million dollars in reserve just to cover fines that might be imposed by the FTC for cheating consumers.  If nothing else, this is just an admission that the banks deliberate cheat consumers because it is profitable and they know there is a cost of doing this and it is still profitable, so these fines are a joke and to the banks, just a cost of doing business. 

Now, the part most of you really want to know about, the nasty “Universal Default” system.  This is where the banks dramatically increase your interest rate if another creditor reports a late payment.  So this uniform software surveillance system is monitoring consumer credit files every minute so that if any account is reported late for a consumer, all the pre-programmed rates for that consumer’s creditors come into effect.  That usually means a rate of let’s say 7.99% may jump to 29% or 39% overnight.  This generates hundreds of millions in profit for the banks, probably more.  So you can imagine how much it could cost them if this were prohibited. 

When you first read the amendments, the new Bill of Rights Act, it looks like this situation is prohibited.  However, there are a few exceptions, one that would apply to everyone, that is, if the banks based your interest rate on a published index, such as the S&P 500.  It does not limit them as to how they calculate against the index either; they might have a formula that lets them do exactly what they are doing now no matter what the index trends.  This makes the entire legislation worthless, much like the Fair Debt Collection Practices Act does nothing to help consumers and much like the IRS Restructure and Reform Act of 1998 only accomplished one thing, quieted the consumers and stopped the flood of annoying calls and letters to congressmen. 

I think what is more important here, not that consumers really care, is that this provision allows the larger banks such as JP Morgan, who are able to manipulate the indexes they are using, to make greater profits than the smaller banks that do not have that power.  This is a monopoly game of course; everything you see is designed to eliminate competition, gutting the middle class and small mortgage companies in the last few years is just one example.  Creating a means to “tax” consumers through interest rates, that is, changing the cost of their money without inhibition, also allows the larger banks to penalize the smaller banks by the same mechanism. 

And what I think is more insidious is using the term “bill of rights” in legislation that regulates credit card accounts.  The Constitutional Bill of Rights was written to limit government’s intrusion into the absolute rights, that is, those rights people already had before the laws were written, and did not give any citizen rights.  But you have the opposite here, the banking system should not even exist and here we have a regulating piece of legislation that purports to give the consumers who are being cheated new rights to protect them against the cheaters.  The real problem is that the cheaters are writing the rules. 

I have seen and continue to expect a dramatic increase in interest rate hikes for everyone, even those with the best credit.  We will see a tidal wave of consumers who have never before been affected by interest rates begin losing ground on their ability to pay.  While June of 2010 approaches, you just have to know that the banks are frantically upgrading their software to meet the rules to the exception for increasing interest rates.  I suspect it will be business as usual. 

I am including a copy of the amended sections in this article and a copy of the penalty provisions responsible for penalizing its violations.  These are all found under the latest version of the Truth and Lending Act. 

April 30, 2009 

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.  

      Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,   

SECTION 1. SHORT TITLE. 

      This Act may be cited as the ‘Credit Cardholders’ Bill of Rights Act of 2009’.  

SEC. 2. CREDIT CARDS ON TERMS CONSUMERS CAN REPAY. 

      (a) Retroactive Rate Increases and Universal Default Limited- Chapter 2 of the Truth in Lending Act (15 U.S.C. 1631 et seq.) is amended by inserting after section 127A the following new section:  

    ‘Sec. 127B. Additional requirements for credit card accounts under an open end consumer credit plan 

            ‘(a) Retroactive Rate Increases and Universal Default Limited-  

                  ‘(1) IN GENERAL- Except as provided in subsection (b), no creditor may increase any annual percentage rate of interest applicable to the existing balance on a credit card account of the consumer under an open end consumer credit plan.  

                  ‘(2) EXISTING BALANCE DEFINED- For purposes of this subsection and subsections (b) and (c), the term ‘existing balance’ means the amount owed on a consumer credit card account as of the end of the 7th day after the creditor provides notice of an increase in the annual percentage rate in accordance with subsection (c).  

                  ‘(3) TREATMENT OF EXISTING BALANCES FOLLOWING RATE INCREASE- If a creditor increases any annual percentage rate of interest applicable to the credit card account of a consumer under an open end consumer credit plan and there is an existing balance in the account to which such increase may not apply, the creditor shall allow the consumer to repay the existing balance using a method provided by the creditor which is at least as beneficial to the consumer as 1 of the following methods:  

                        ‘(A) An amortization period for the existing balance of at least 5 years starting from the date on which the increased annual percentage rate went into effect.  

                        ‘(B) The percentage of the existing balance that was included in the required minimum periodic payment before the rate increase cannot be more than doubled.  

                  ‘(4) LIMITATION ON CERTAIN FEES- If--  

                        ‘(A) a creditor increases any annual percentage rate of interest applicable on a credit card account of the consumer under an open end consumer credit plan; and  

                        ‘(B) the creditor is prohibited by this section from applying the increased rate to an existing balance,  

                  the creditor may not assess any fee or charge based solely on the existing balance.’.  

            (b) Exceptions to the Amendment Made by Subsection (a)- Section 127B of the Truth in Lending Act is amended by inserting after subsection (a) (as added by subsection (a)) the following new subsection:  

          ‘(b) Exceptions-  

                  ‘(1) IN GENERAL- A creditor may increase any annual percentage rate of interest applicable to the existing balance on a credit card account of the consumer under an open end consumer credit plan only under the following circumstances:  

                        ‘(A) CHANGE IN INDEX- The increase is due solely to the operation of an index that is not under the creditor’s control and is available to the general public.  

                        ‘(B) EXPIRATION OF PROMOTIONAL RATE- The increase is due solely to the expiration of a promotional rate.  

                        ‘(C) FAILURE TO COMPLY WITH WORKOUT PLAN- The increase is due solely to the fact the consumer failed to comply with a negotiated workout plan with the creditor.  

                        ‘(D) PAYMENT NOT RECEIVED DURING 30-DAY GRACE PERIOD AFTER DUE DATE- The increase is due solely to the fact that any consumer’s minimum payment has not been received within 30 days after the due date for such minimum payment.  

                  ‘(2) LIMITATION ON INCREASES DUE TO FAILURE TO COMPLY WITH WORKOUT PLAN- Notwithstanding paragraph (1)(C), the annual percentage rate in effect with respect to each category of transactions for a credit card account under an open end consumer credit plan after the increase permitted under such subsection due to the failure of a consumer to comply with a workout plan may not exceed the annual percentage applicable to such category of transactions on the day before the effective date of the workout plan.  

                  ‘(3) STANDARDS REQUIRED- The Board shall prescribe, by regulation, standards--  

                        ‘(A) for entering into any workout plan applicable to any credit card account under an open end consumer credit plan; and  

                          ‘(B) governing any such workout plan.’.  

            (c) Advance Notice of Rate Increases and Significant Contract Changes- Section 127B of the Truth in Lending Act is amended by inserting after subsection (b) (as added by subsection (b)) the following new subsections:  

            ‘(c) Advance Notice of Rate Increases-  

                  ‘(1) IN GENERAL- In the case of any credit card account under an open end consumer credit plan, no increase in any annual percentage rate of interest (other than an increase described in subsection (b)(1)(A)) may take effect unless the creditor provides a written notice to the consumer at least 45 days before the increase takes effect which fully describes the changes in the annual percentage rate, in a complete and conspicuous manner, and the extent to which such increase would apply to an existing balance.  

                  ‘(2) LIMITATION ON RATE INCREASE NOTICES WITHIN FIRST YEAR- Except in the case of an increase described in subparagraph (B), (C), or (D) of subsection (b)(1), no written notice under paragraph (1) of an increase in any annual percentage rate of interest on any credit card account under an open end consumer credit plan (for which notice is required under such paragraph) shall be effective before the end of the 1-year period beginning when the account is opened.  

                  ‘(3) MINIMUM TERM FOR PROMOTIONAL RATES- In the case of a promotional rate, no written notice under paragraph (1) of an increase in any annual percentage rate of interest on any credit card account under an open end consumer credit plan shall be effective before the end of a 6-month period beginning from the date the promotional rate takes effect.  

            ‘(d) Advance Notice of Account Closure-  

                  ‘(1) IN GENERAL- In the case of any credit card account under an open end consumer credit plan, a creditor may not close such account unless the creditor provides a written notice to the consumer at least 30 days before the closure takes place, and which notifies the consumer--  

                        ‘(A) of the reason the account is being closed;  

                        ‘(B) of any recourse that the consumer may take to prevent the account from being closed;  

                        ‘(C) of any program under which the consumer may repay the balance on the account over a period of time; and  

                        ‘(D) that if the consumer’s account is closed, it may have an impact on the consumer’s credit score.  

                  ‘(2) EXCEPTION- The requirements of paragraph (1) shall not apply in the case of a consumer request that the creditor close such account.  

            ‘(e) Advance Notice of Significant Contract Changes- In the case of any credit card account under an open end consumer credit plan, no significant change to the contract (such as any fee) may take effect unless the creditor provides a written notice of at least 45 days before the change takes effect which fully describes the changes in the contract, in a complete and conspicuous manner.’.  

            (d) Clerical Amendment- The table of sections for chapter 2 of the Truth in Lending Act (15 U.S.C. 1631 et seq.) is amended by inserting after the item relating to section 127A the following new item:  

                  ‘127B. Additional requirements for credit card accounts under an open end consumer credit plan.’.  

SEC. 3. ADDITIONAL PROVISIONS REGARDING ACCOUNT FEATURES, TERMS, AND PRICING. 

      (a) Double Cycle Billing Prohibited- Section 127B of the Truth in Lending Act is amended by inserting after subsection (d) (as added by section 2(c)) the following new subsection:  

            ‘(e) Double Cycle Billing-  

                  ‘(1) IN GENERAL- No finance charge may be imposed by a creditor with respect to any balance on a credit card account under an open end consumer credit plan that is based on balances for days in billing cycles preceding the most recent billing cycle as a result of the loss of any grace period.  

                  ‘(2) EXCEPTIONS- Paragraph (1) shall not apply so as to prohibit a creditor from--  

                        ‘(A) adjusting finance charges following the return of a payment for insufficient funds; or  

                        ‘(B) adjusting finance charges following resolution of a billing error dispute.  

                  ‘(3) GRACE PERIOD- For purposes of this subsection, the term ‘grace period’ means, with respect to any credit card account under an open end consumer credit plan, the time period, if any, provided by the creditor within which any credit extended under such credit plan for purchases of goods or services may be repaid by the consumer without incurring a finance charge.’.  

      (b) Limitations Relating to Account Balances Attributable Only to Accrued Interest- Section 127B is amended by inserting after subsection (e) (as added by subsection (a)) the following new subsection:  

            ‘(f) Limitations Relating to Account Balances Attributable Only to Accrued Interest-  

                  ‘(1) IN GENERAL- If the outstanding balance on a credit card account under an open end consumer credit plan at the end of a billing period represents an amount attributable only to interest accrued during the preceding billing period on an outstanding balance that was fully repaid during the preceding billing period--  

                        ‘(A) no fee may be imposed or collected in connection with such balance attributable only to interest before such end of the billing period; and  

                        ‘(B) any failure to make timely repayments of the balance attributable only to interest before such end of the billing period shall not constitute a default on the account.  

                  Such balance remains a legally binding debt obligation.  

                  ‘(2) RULE OF CONSTRUCTION- Paragraph (1) shall not be construed as affecting--  

                          ‘(A) the consumer’s obligation to pay any accrued interest on a credit card account under an open end consumer credit plan; or  

                        ‘(B) the accrual of interest on the outstanding balance on any such account in accordance with the terms of the account and this title.’.  

      (c) Access to Payoff Balance Information- Section 127B of the Truth in Lending Act is amended by inserting after subsection (f) (as added by subsection (b)) the following new subsection:  

            ‘(g) Payoff Balance Information-  

                  ‘(1) IN GENERAL- Each periodic statement provided by a creditor to a consumer with respect to a credit card account under an open end consumer credit plan shall contain the toll-free telephone number, Internet address, and website at which the consumer may request the payoff balance on the account.  

                  ‘(2) SMALL ISSUERS- Notwithstanding paragraph (1), in the case of any credit card issuer which issues fewer than 50,000 credit cards in conjunction with credit card accounts under open end consumer credit plans, each periodic statement provided by such a creditor to a consumer with respect to any such credit card account shall contain the toll-free telephone number, Internet address, or website at which the consumer may request the payoff balance on the account.’.  

      (d) Consumer Right To Reject Card After Notice Is Provided of Open Account- Section 127B of the Truth in Lending Act is amended by inserting after subsection (g) (as added by subsection (c)) the following new subsection:  

            ‘(h) Consumer Right To Reject Card After Notice of New Account Is Provided to Consumer Reporting Agency-  

                  ‘(1) IN GENERAL- A creditor shall remove any information furnished to a consumer reporting agency (as defined in section 603) concerning the establishment of a newly opened credit card account under an open end consumer credit plan if the consumer has not used or activated the account and the consumer contacts the creditor within 45 days of the establishment of the account to close the account.  

                  ‘(2) RULE OF CONSTRUCTION- Paragraph (1) shall not be construed as prohibiting a creditor from furnishing information about any application for a credit card account under an open end consumer credit plan or any inquiry about any such account to a consumer reporting agency (as so defined).’.  

      (e) Use of Terms Clarified- Section 127B of the Truth in Lending Act is amended by inserting after subsection (h) (as added by subsection (d)) the following new subsection:  

            ‘(i) Use of Terms- The following requirements shall apply with respect to the terms of any credit card account under any open end consumer credit plan:  

                  ‘(1) ‘FIXED’ RATE- The term ‘fixed’, when appearing in conjunction with a reference to the annual percentage rate or interest rate applicable with respect to such account, may only be used to refer to an annual percentage rate or interest rate that will not change or vary for any reason over the period clearly and conspicuously specified in the terms of the account.  

                  ‘(2) PRIME RATE- The term ‘prime rate’, when appearing in any agreement or contract for any such account, may only be used to refer to the bank prime rate published in the Federal Reserve Statistical Release on selected interest rates (daily or weekly), and commonly referred to as the H.15 release (or any successor publication).  

                  ‘(3) DUE DATE-  

                        ‘(A) IN GENERAL- Each periodic statement for any such account shall contain a date by which the next periodic payment on the account must be made to avoid a late fee or be considered a late payment, and any payment received by 5 p.m., local time at the location specified by the creditor for the receipt of payment, on such date shall be treated as a timely payment for all purposes.  

                        ‘(B) CERTAIN ELECTRONIC FUND TRANSFERS- Any payment with respect to any such account made by a consumer online to the website of the credit card issuer or by telephone directly to the credit card issuer before 5 p.m., local time at the location specified by the creditor for the receipt of payment, on any business day shall be credited to the consumer’s account that business day.  

                        ‘(C) PRESUMPTION OF TIMELY PAYMENT- Any evidence provided by a consumer in the form of a receipt from the United States Postal Service or other common carrier indicating that a payment on a credit card account was sent to the issuer not less than 7 days before the due date contained in the periodic statement under subparagraph (A) for such payment shall create a presumption that such payment was made by the due date, which may be rebutted by the creditor for fraud or dishonesty on the part of the consumer with respect to the mailing date.’.  

      (f) Payment Allocations- Section 127B of the Truth in Lending Act is amended by inserting after subsection (i) (as added by subsection (e)) the following new subsection:  

            ‘(j) Payment Allocations-  

                  ‘(1) IN GENERAL- If 2 or more different annual percentage rates apply to different portions of an outstanding balance on a credit card account under an open end consumer credit plan, the amount of any periodic payment in excess of the required minimum payment shall be allocated first to the balance with the highest annual percentage rate and any remaining portion is allocated to any other balance in descending order, based on the applicable annual percentage rate each portion of such balance bears, from the highest such rate to the lowest.  

                  ‘(2) CLARIFICATION RELATING TO CERTAIN DEFERRED INTEREST ARRANGEMENTS- A creditor may allocate the entire amount paid by the consumer in excess of the required minimum periodic payment to a balance on which interest is deferred during the 2 billing cycles immediately preceding the expiration of the period during which interest is deferred.  

                  ‘(3) PROHIBITION ON RESTRICTED GRACE PERIODS UNDER CERTAIN CIRCUMSTANCES- If, with respect to any credit card account under an open end consumer credit plan, a creditor offers a time period in which to repay credit extended without incurring finance charges to cardholders who pay the balance in full, the creditor may not deny a consumer who takes advantage of a promotional rate balance or deferred interest rate balance offer with respect to such an account any such time period for repaying credit without incurring finance charges.’.  

      (g) Timely Provision of Periodic Statements- Section 127B of the Truth in Lending Act is amended by inserting after subsection (j) (as added by subsection (f)) the following new subsection:  

            ‘(k) Timely Provision of Periodic Statements- Each periodic statement with respect to a credit card account under an open end consumer credit plan shall be sent by the creditor to the consumer not less than 21 calendar days before the due date identified in such statement for the next payment on the outstanding balance on such account, and section 163(a) shall be applied with respect to any such account by substituting ‘21’ for ‘fourteen’.’.  

      (h) Due Dates- Section 127B of the Truth in Lending Act is amended by inserting after subsection (k) (as added by subsection (g)) the following new subsection:  

          ‘(l) Due Dates- If the date established by a creditor as the date on which a periodic payment on a credit card account under an open end consumer credit plan is due is a day on which mail is either not delivered to such creditor or is not accepted by the creditor for processing on such day, the creditor may not treat the receipt by the creditor of any such periodic payment by mail as of the next business day of the creditor as late for any purpose.’.  

      (i) Availability of Legitimate and Accredited Credit Counseling- The Board of Governors of the Federal Reserve System shall suggest appropriate guidelines for creditors to follow with respect to credit card accounts under open end consumer credit plans to supply consumer cardholders with information regarding the availability of legitimate and accredited credit counseling services.  

SEC. 4. CONSUMER CHOICE WITH RESPECT TO OVER-THE-LIMIT TRANSACTIONS. 

      Section 127B of the Truth in Lending Act is amended by inserting after subsection (l) (as added by section 3(h)) the following new subsections:  

            ‘(m) 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 elected to permit the creditor, with respect to such account, to complete transactions involving the extension of credit, with respect to 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.  

                  ‘(3) FORM OF ELECTION- A consumer may make the election referred to in paragraph (1) orally or in writing.  

                  ‘(4) TIME OF ELECTION- A consumer may make the election referred to in paragraph (1) at any time and it shall be effective until the election is revoked by the consumer orally or in writing.  

                  ‘(5) REGULATIONS-  

                        ‘(A) IN GENERAL- The Board shall issue regulations allowing for the completion of over-the-limit transactions that for operational reasons exceed the credit limit by a de minimis amount, even where the cardholder has not made an election under paragraph (1).  

                        ‘(B) SUBJECT TO NO FEE LIMITATION- The regulations prescribed under subparagraph (A) shall not allow for the imposition of any fee or any rate increase based on the permitted over-the-limit transactions with respect to the account of any cardholder who has not made the election in paragraph (1).  

                        ‘(C) DISCLOSURES- The Board shall prescribe regulations governing any disclosure under this subsection.  

            ‘(n) Over-the-Limit Fee Restrictions- With respect to a credit card account under an open end consumer credit plan, an over-the-limit fee may be imposed only once during a billing cycle if, on the last day of such billing cycle, the credit limit on the account is exceeded, and an over-the-limit fee, with respect to such excess credit, may be imposed only once in each of the 2 subsequent billing cycles, unless the consumer has obtained an additional extension of credit in excess of such credit limit during any such subsequent cycle or the consumer reduces the outstanding balance below the credit limit as of the end of such billing cycle.  

            ‘(o) Over-the-Limit Fees Prohibited in Conjunction With Certain Credit Holds- Notwithstanding subsection (n), an over-the-limit fee may not be imposed if the credit limit was exceeded due to a hold unless the actual amount of the transaction for which the hold was placed would have resulted in the consumer exceeding the credit limit.’.  

SEC. 5. STRENGTHEN CREDIT CARD INFORMATION COLLECTION. 

      Section 136(b) of the Truth in Lending Act (15 U.S.C. 1646(b)) is amended--  

              (1) in paragraph (1)--  

                    (A) by striking ‘COLLECTION REQUIRED- The Board shall’ and inserting ‘COLLECTION REQUIRED-  

                        ‘(A) IN GENERAL- The Board shall’.  

                    (B) by adding at the end the following new subparagraph:  

                        ‘(B) INFORMATION TO BE INCLUDED- The information under subparagraph (A) shall include, for the relevant semiannual period, the following information with respect each creditor in connection with any consumer credit card account:  

                              ‘(i) A list of each type of transaction or event during the semiannual period for which 1 or more creditors has imposed a separate interest rate upon a consumer credit card accountholder, including purchases, cash advances, and balance transfers.  

                              ‘(ii) For each type of transaction or event identified under clause (i)--  

                                    ‘(I) each distinct interest rate charged by the card issuer to a consumer credit card accountholder during the semiannual period; and  

                                    ‘(II) the number of cardholders to whom each such interest rate was applied during the last calendar month of the semiannual period, and the total amount of interest charged to such accountholders at each such rate during such month.  

                              ‘(iii) A list of each type of fee that 1 or more of the creditors has imposed upon a consumer credit card accountholder during the semiannual period, including any fee imposed for obtaining a cash advance, making a late payment, exceeding the credit limit on an account, making a balance transfer, or exchanging United States dollars for foreign currency.  

                              ‘(iv) For each type of fee identified under clause (iii), the number of accountholders upon whom the fee was imposed during each calendar month of the semiannual period, and the total amount of fees imposed upon cardholders during such month.  

                              ‘(v) The total number of consumer credit card accountholders that incurred any finance charge or any other fee during the semiannual period.  

                              ‘(vi) The total number of consumer credit card accounts maintained by each creditor as of the end of the semiannual period.  

                              ‘(vii) The total number and value of cash advances made during the semiannual period under a consumer credit card account.  

                              ‘(viii) The total number and value of purchases involving or constituting consumer credit card transactions during the semiannual period.  

                              ‘(ix) The total number and amount of repayments on outstanding balances on consumer credit card accounts in each month of the semiannual period.  

                              ‘(x) The percentage of all consumer credit card accountholders (with respect to any creditor) who--  

                                    ‘(I) incurred a finance charge in each month of the semiannual period on any portion of an outstanding balance on which a finance charge had not previously been incurred; and  

                                    ‘(II) incurred any such finance charge at any time during the semiannual period.  

                              ‘(xi) The total number and amount of balances accruing finance charges during the semiannual period.  

                              ‘(xii) The total number and amount of the outstanding balances on consumer credit card accounts as of the end of such semiannual period.  

                              ‘(xiii) Total credit limits in effect on consumer credit card accounts as of the end of such semiannual period and the amount by which such credit limits exceed the credit limits in effect as of the beginning of such period.  

                              ‘(xiv) Any other information related to interest rates, fees, or other charges that the Board deems of interest.’; and  

              (2) by adding at the end the following new paragraph:  

                  ‘(5) REPORT TO CONGRESS- The Board shall, on an annual basis, transmit to Congress and make public a report containing estimates by the Board of the approximate, relative percentage of income derived by the credit card operations of depository institutions from--  

                        ‘(A) the imposition of interest rates on cardholders, including separate estimates for--  

                              ‘(i) interest with an annual percentage rate of less than 25 percent; and  

                              ‘(ii) interest with an annual percentage rate equal to or greater than 25 percent;  

                        ‘(B) the imposition of fees on cardholders;  

                        ‘(C) the imposition of fees on merchants; and  

                        ‘(D) any other material source of income, while specifying the nature of that income.’.  

SEC. 6. STANDARDS APPLICABLE TO INITIAL ISSUANCE OF SUBPRIME OR ‘FEE HARVESTER’ CARDS. 

      Section 127B of the Truth in Lending Act is amended by inserting after subsection (o) (as added by section 4) the following new subsection:  

            ‘(p) Standards Applicable to Initial Issuance of Subprime or ‘Fee Harvester’ Cards-  

                  ‘(1) IN GENERAL- In the case of any credit card account under an open end consumer credit plan the terms of which require the payment of any fee (other than any late fee, any over-the-limit fee, or any fee for a payment returned for insufficient funds) by the consumer in the first year the account is opened in an 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 fee (other than any late fee, any over-the-limit fee, or any fee for a payment returned for insufficient funds) may be made from the credit made available by the card.  

                  ‘(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. 7. 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 new paragraphs:  

                  ‘(8) EXTENSIONS OF CREDIT TO UNDERAGE CONSUMERS-  

                        ‘(A) IN GENERAL- No credit card may be knowingly issued to, or open end credit plan established on behalf of, a consumer who has not attained the age of 18, unless the consumer is emancipated under applicable State law or the parent or legal guardian of such consumer is designated as the primary account holder.  

                        ‘(B) RULE OF CONSTRUCTION- For the purposes of determining the age of an applicant, the submission of a signed application by a consumer stating that the consumer is over 18 shall be considered sufficient proof of age.  

                  ‘(9) PROVISIONS APPLICABLE WITH REGARD TO THE ISSUANCE OF CREDIT CARDS TO FULL-TIME, TRADITIONAL-AGED COLLEGE STUDENTS-  

                        ‘(A) DEFINITIONS- For purposes of this paragraph, the following definitions shall apply:  

                              ‘(i) COLLEGE STUDENT CREDIT CARD ACCOUNT DEFINED- The term ‘college student credit card account’ means a credit card account under an open end consumer credit plan established or maintained for or on behalf of any college student.  

                              ‘(ii) COLLEGE STUDENT- The term ‘college student’ means an individual--  

                                    ‘(I) who is a full-time student attending an institution of higher education; and  

                                    ‘(II) who has attained the age of 18 and has not yet attained the age of 21.  

                              ‘(iii) INSTITUTION OF HIGHER EDUCATION- The term ‘institution of higher education’ has the same meaning as in section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a)).  

                        ‘(B) MAXIMUM AMOUNT LIMITATION AS A PERCENTAGE OF GROSS INCOME- Unless a parent, legal guardian, or spouse of a college student assumes joint liability for debts incurred by the student in connection with a college student credit card account--  

                              ‘(i) the amount of credit which may be extended by any one creditor to the full-time college student may not exceed, during any full calendar year, the greater of--  

                                    ‘(I) 20 percent of the annual gross income of the student; or  

                                    ‘(II) $500; and  

                              ‘(ii) no creditor shall grant a student a credit card account, if the credit limit for that credit card account, combined with the credit limits of any other credit card accounts held by the student, would exceed 30 percent of the annual gross income of the student in the most recently completed calendar year.  

                        ‘(C) 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 college student credit card account for which a parent, legal guardian, or spouse of the consumer has assumed joint liability for debts incurred by the consumer in connection with the account, before the consumer attains the age of 21, with respect to such consumer, unless the parent, guardian, or spouse of the consumer, as applicable, approves in writing, and assumes joint liability for, such increase.  

                        ‘(D) INCOME VERIFICATION- For purposes of this paragraph, a creditor shall require adequate proof of income, income history, and credit history, subject to the rules of the Board, before any college student credit card account may be opened by or on behalf of a student.  

                        ‘(E) PROHIBITION ON MORE THAN 1 CREDIT CARD ACCOUNT FOR ANY COLLEGE STUDENT- No creditor may open a credit card account for, or issue any credit card to, any college student who--  

                              ‘(i) has no verifiable annual gross income; and  

                              ‘(ii) already maintains a credit card account under an open end consumer credit plan with that creditor, or any affiliate thereof.  

                        ‘(F) EXEMPTION AUTHORITY- The Board may, by rule, provide for exemptions to the provisions of this paragraph, as deemed necessary or appropriate by the Board, consistent with the purposes of this paragraph.’.  

SEC. 8. PROHIBIT FEES FOR PAYMENT ON CREDIT CARD ACCOUNTS BY TELEPHONE OR ELECTRONIC FUND TRANSFERS. 

      Section 164 of the Truth in Lending Act (15 U.S.C. 1666c) is amended--  

              (1) by striking ‘Payments received’ and inserting ‘(a) In General- Payments received’; and  

              (2) by adding at the end the following new subsection:  

            ‘(b) Payment Fees-  

                  ‘(1) PROHIBITION ON FEE BASED ON MODE OF PAYMENT- Except as provided in paragraph (2), in the case of a credit card account under an open end consumer credit plan, a creditor may not impose a fee on the obligor based on the particular manner in which the obligor makes a payment on such account.  

                  ‘(2) EXCEPTION- If the obligor requests to make an expedited payment on a credit card account under an open end consumer credit plan by telephone on the date that a payment is due, or the day immediately preceding such date, the creditor may assess a fee for crediting the payment to the obligor’s account on or by such date.’.  

SEC. 9. REGULATIONS RELATING TO ACTIVE DUTY MILITARY CONSUMERS AND RECENTLY DISABLED VETERANS. 

      Section 127B of the Truth in Lending Act is amended by inserting after subsection (p) (as added by section 6) the following new subsection:  

            ‘(q) Regulations Relating to Active Duty Military Consumers and Recently Disabled Veterans- In the case of any credit card account, under an open end consumer credit plan, held by any veteran receiving compensation for a service-connected disability (as such terms are defined in section 101 of title 38, United States Code) that occurred less than 2 years before or any active duty military consumer (as defined in section 603(q)(2) of this Act) , the Board shall prescribe regulations that prohibits the creditor with respect to such account from making adverse reports to any consumer reporting agency with respect while the consumer maintains status as such a veteran or as an active duty military consumer.’.  

SEC. 10. POSTING INFORMATION ON THE INTERNET. 

      Section 122 of the Truth in Lending Act ( U.S.C. 1632) is amended by adding at the end the following new subsection:  

            ‘(d) Internet Posting of Credit Card Agreements-  

                  ‘(1) POSTING AGREEMENTS- .A creditor shall establish and maintain an Internet site on which the creditor will post the written agreement between the creditor and the consumer for each open-end consumer credit plan not secured by a dwelling that has a credit card feature.  

                  ‘(2) PROVIDING COPY OF CONTRACTS TO THE BOARD- A creditor shall provide to the Board in electronic format, the consumer credit card agreements that the creditor publishes on the creditor’s Internet site.  

                  ‘(3) RECORD REPOSITORY- The Board shall establish and maintain on its publically available Internet site a central repository of the consumer credit card agreements received from the creditors pursuant to this subsection and such agreements shall be easily accessible and retrievable.  

                  ‘(4) EXCEPTION- Paragraphs (1) and (2) 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 agencies described in section 108 and the Federal Trade Commission, may prescribe regulations to implement this subsection, including--  

                        ‘(A) specifying the format for posting the agreements on the creditor’s Internet site; and  

                        ‘(B) establishing exceptions to paragraphs (1) and (2) in cases where 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’.  

SEC. 11. ENHANCED MINIMUM PAYMENT DISCLOSURES. 

      Paragraph (11) of section 127(b) of the Truth in Lending Act (15 U.S.C. 1637(b)(11)) is amended to read as follows:  

                  ‘(11) MINIMUM PAYMENT DISCLOSURES-  

                        ‘(A) MINIMUM PAYMENT WARNING- A written statement in the following form: ‘Minimum Payment Warning: Making only the minimum payment will increase the interest you pay and the time it takes to repay your balance.’.  

                        ‘(B) INFORMATION ON OUTSTANDING BALANCE- Not less than once per calendar quarter, such billing statement shall also include 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 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 12 months, 24 months, and 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 12, 24, or 36 months, respectively; and  

                              ‘(iv) a toll-free telephone number at which the consumer may receive information about accessing credit counseling and debt management services.  

                        ‘(C) EXCEPTION TO REQUIREMENTS OF SUBSECTION (B)- The quarterly disclosure requirements in subsection (B) shall not apply with respect to--  

                              ‘(i) a calendar quarter if, in the 2 consecutive billing cycles preceding the end of such quarter, a consumer has paid the entire balance of the bill in full;  

                              ‘(ii) a calendar quarter if, at the end of the calendar quarter, a consumer has an outstanding credit balance of zero or has a positive credit; or  

                              ‘(iii) any class of consumers for which the Board has determined will not benefit substantially from additional disclosures.  

                        ‘(D) APPLICABLE RATES TO BE USED IN DISCLOSURES-  

                              ‘(i) IN GENERAL- 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) SPECIAL RULE IN CASE OF TEMPORARY RATE- 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.  

                        ‘(E) FORM AND PROMINENCE OF DISCLOSURE- All of the information described in subparagraph (B) shall--  

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

                              ‘(ii) be placed in a conspicuous and prominent location on the billing statement in conspicuous typeface.  

                        ‘(F) TABULAR FORMAT- 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.  

                        ‘(G) LOCATION AND ORDER OF TABLE- 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 described in subparagraph (B).  

                        ‘(H) SUBSTITUTION OF TERMINOLOGY- In prescribing the form of the table under subparagraph (D), the Board may employ terminology which is different than the terminology used in subparagraph (B), if such terminology is more easily understood and conveys substantially the same meaning.  

                        ‘(I) ‘ROUNDING’ REGULATIONS- For purposes of determining whether an error in the disclosures required by subparagraph (B) constitutes a legal cause of action against a creditor or any other party, the standard referred to under the heading ‘Rounding assumed payments, current balance and interest charges to the nearest cent’ in the publication by the Board in the Federal Register (74 Fed. Reg. 5385) on January 29, 2009, of the final regulation revising part 226 of title 12 of the Code of Federal Regulations (Regulation Z), or a standard that affords substantially similar protections as determined by the Board, shall apply for purposes of the determination with regard to such disclosures.’.  

SEC. 12. 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, within the limits of its existing resources available for reporting purposes 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 disclosure of terms, fees, and other expense of credit card plans;  

              (3) the adequacy of protections against unfair or deceptive acts or practices relating to credit card plans, and  

              (4) whether or not, and to what extent, the Credit Cardholders’ Bill of Rights Act of 2009 has resulted in--  

                    (A) higher annual percentage rates of interest, on average, for credit card users than the average of such rates of interest in effect before the effective date of the Act;  

                    (B) the imposition of annual fees or other credit card fees--  

                          (i) that did not exist before such effective date;  

                          (ii) at a higher average rate of applicability than existed before such effective date; or  

                          (iii) with higher average costs to the consumer than were in effect before such effective date;  

                    (C) an increase in the rate of denial of--  

                            (i) new credit card accounts for consumers; or  

                          (ii) new extensions of credit, or additional lines of credit, for existing credit accounts established before such effective date; or  

                    (D) any other adverse or negative condition or effect on consumers.  

      (b) Solicitation of Public Comment- In connection with 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-  

              (1) NOTICE- Following the review required by subsection (a) the Board shall publish a notice in the Federal Register that--  

                    (A) 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  

                    (B) either--  

                          (i) proposes new or revised regulations or interpretations to update or revise disclosures and protections for consumer credit cards as appropriate; or  

                          (ii) states the reason for the Board’s determination that new or revised regulations are not proposed.  

              (2) REVISION OF REVIEW PERIOD FOLLOWING MATERIAL REVISION OF REGULATIONS- In the event the Board materially revises regulations on consumer credit card plans, a review need not be conducted until 2 years following the effective date of the revised regulations, which thereafter shall become the new date for the biennial review required by subsection (a).  

      (d) Board Report to the Congress- The Board shall report to the Congress no less frequently than every 2 years, except as provided in subsection (c)(2), on the status of its most recent review, its efforts to address any issues identified from the review, and any recommendations for legislation.  

      (e) Additional Reporting- The Federal banking agencies and the Federal Trade Commission shall provide annually to the Board, and the Board shall include in its annual report to Congress under section 10 of the Federal Reserve Act, information about the supervisory and enforcement activities of the agencies with respect to credit card issuers’ compliance with applicable Federal consumer protection statutes and regulations including--  

              (1) this Act, the amendments made by this Act, and regulations prescribed under this Act and such amendments; and  

              (2) section 5 of the Federal Trade Commission Act, and regulations prescribed under the Federal Trade Commission Act, such as part 227 of title 12 of the Code of Federal Regulations as prescribed by the Board (Regulation AA).  

SEC. 13. SOLICITATIONS REQUIRED TO INCLUDE WARNING ON ADVERSE EFFECTS OF EXCESSIVE CREDIT INQUIRIES. 

      Section 127(c)(1)(B) of the Truth in Lending Act (15 U.S.C. 1637(c)(1)(B)) is amended by adding at the end the following new clause:  

                              ‘(iv) EXCESSIVE CREDIT INQUIRIES- A warning that excessive credit inquiries, which occur in connection with credit applications and solicitations and under other circumstances, can have an adverse effect on a consumer credit score.’.  

SEC. 14. READABILITY REQUIREMENT. 

      Section 122 of the Truth in Lending Act (U.S.C. 1632) is amended by adding at the end the following new subsection:  

            ‘(d) Minimum Type-Size and Font Requirement for Credit Card Applications and Disclosures- All written information, provisions, and terms in or on any application, solicitation, contract, or agreement for any credit card account under an open end consumer credit plan, and all written information included in or on any disclosure required under this chapter with respect to any such account, shall appear--  

                  ‘(1) in not less than 12-point type; and  

                  ‘(2) in any font other than a font which the Board has designated, in regulations under this section, as a font that inhibits readability.’.  

SEC. 15. REPORT TO CONGRESS ON REDUCTIONS OF CONSUMER CREDIT CARD LIMITS BASED ON CERTAIN INFORMATION AS TO EXPERIENCE OR TRANSACTIONS OF THE CONSUMER. 

      (a) Report on Creditor Practices Required- Before the end of the 6-month period beginning on the date of the enactment of this Act, the Board of Governors of the Federal Reserve System, in consultation with the Comptroller of the Currency, the Director of the Office of Thrift Supervision, the Federal Deposit Insurance Corporation, the National Credit Union Administration Board, and the Federal Trade Commission, shall report to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate on the extent to which, during the 3-year period ending on such date of enactment, creditors have reduced credit limits or raised interest rates applicable to credit card accounts under open end consumer credit plans based on--  

              (1) the geographical location where a credit transaction with the consumer takes place or the identity of the merchant involved in the transaction;  

              (2) the consumer’s credit transactions, including the type of credit transaction, the type of items purchased in such transaction, the price of items purchased in such transaction, any change in the type or price of items purchased in such transactions, and other data pertaining to the consumer’s use of such credit card account; and  

              (3) the identity of the mortgage creditor which extended or holds the mortgage loan secured by the consumer’s primary residence.  

      (b) Other Information- The report required under subsection (a) shall also include--  

              (1) the number and identity of creditors that have engaged in the practices described in subsection (a);  

              (2) the extent to which the practices described in subsection (a) have an adverse impact on minority or low-income consumers;  

              (3) any other relevant information regarding such practices; and  

              (4) recommendations to the Congress on regulatory or statutory changes that may be needed to restrict or prevent such practices.  

SEC. 16. PROCEDURE FOR TIMELY SETTLEMENTS OF DECEDENT OBLIGORS’ ESTATES. 

      (a) In General- Chapter 2 of the Truth in Lending Act ( U.S.C. 1631 et seq.) is amended by adding at the end the following new section:  

    ‘Sec. 140A Procedure for timely settlements of decedent obligors’ estates 

            ‘The Board, in consultation with the Federal Trade Commission and each other agency referred to in section 108(a), shall prescribe regulations to require any creditor, with respect to any credit card account under an open end consumer credit plan, to establish procedures to ensure that any administrator of an estate of any deceased obligor with respect to such account can resolve outstanding credit balances in a timely manner.’.  

            (b) Clerical Amendment- The table of sections for chapter 2 of the Truth in Lending Act is amended by inserting after the item relating to section 140 the following new item:  

                  ‘140A. Procedure for timely settlements of decedent obligors’ estates.’.  

SEC. 17. INTERIM IMPLEMENTATION REPORTS TO THE CONGRESS. 

      The Chairman of the Board of Governors of the Federal Reserve System shall submit a report each 90 days after the date of the enactment of this Act on the level of implementation of the regulations required to be prescribed under this Act to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate until the Chairman can report full industry implementation.  

SEC. 18. DISCLOSURE REQUIREMENT FOR STORES ACCEPTING CREDIT CARD ACCOUNT APPLICATIONS. 

      (a) In General- Section 122 of the Truth in Lending Act (15 U.S.C. 1632) is amended by adding at the end the following:  

            ‘(d) Signs Required on Certain Premises Where Credit Card Account Applications Accepted-  

                  ‘(1) IN GENERAL- A person who sells personal property to consumers on a business premises and makes available to consumers on such premises any application to open a credit card account under an open end consumer credit plan, and where such person is the issuer of such account, shall display in the premises on a sign any information that is subject to subsection (c) and that is required to be disclosed by the person on that application.  

                  ‘(2) FORMAT- Such information shall be displayed on the sign in the form and manner which the Board shall prescribe by regulations and which, to the extent practicable and appropriate, shall be consistent with the form and manner required for the disclosure of such information on the credit card application.  

                  ‘(3) SIGN PLACEMENT- Such signs shall be conspicuously placed at each location on the premises where the credit card application may be submitted by the consumer.’.  

      (b) Conforming Amendment- Section 111(e) of the Truth in Lending Act (15 U.S.C. 1610(e)) is amended by adding at the end the following:  

            ‘Section 122(d) shall supersede State laws relating to store display of the information that is subject to the requirements of such section, except that any State may employ or establish State laws for the purpose of enforcing the requirements of such section.’.  

SEC. 19. EFFECTIVE DATE. 

      (a) In General- Except as provided in subsection (c) for the period described in such subsection, the amendments made by this Act shall apply to all credit card accounts under open end consumer credit plans after the earlier of--  

              (1) the end of the 12-month period beginning on the date of the enactment of this Act; or  

              (2) June 30, 2010.  

      (b) Regulations- Except as provided in subsection (c) for the period described in such subsection, the Board of Governors of the Federal Reserve System, in consultation with the Comptroller of the Currency, the Director of the Office of Thrift Supervision, the Federal Deposit Insurance Corporation, the National Credit Union Administration Board, and the Federal Trade Commission, shall prescribe regulations, in final form, implementing the amendments made by this Act before the earlier of--  

              (1) the end of the 5-month period beginning on the date of the enactment of this Act; or  

              (2) June 1, 2010.  

      (c) Interim Effective Period for Advance Notices of Rate Increases-  

              (1) IN GENERAL- During the period beginning 90 days after the date of the enactment of this Act and ending on the effective date of all the amendments under this Act as determined pursuant to subsection (a), no increase in any annual percentage rate of interest on any credit card account under an open end consumer credit plan (as such terms are defined in the Truth in Lending Act) may take effect unless the creditor provides a written notice to the consumer at least 45 days before the increase would otherwise take effect which fully describes the changes in the annual percentage rate, in a complete and conspicuous manner, and the extent to which such increase would apply to an existing balance.  

              (2) EXCEPTIONS- A notice shall not be required under paragraph (1) for an increase in an annual percentage rate described in subparagraph (A), (B), or (C) of section 127B(b)(1) (as added by section 2).  

              (3) REGULATIONS- The Board of Governors of the Federal Reserve System shall prescribe regulations implementing the amendment referred to in paragraph (1), for purposes of this subsection, before the end of the 60-day period beginning on the date of the enactment of this Act.  

Passed the House of Representatives April 30, 2009.  

Existing Terms of the Truth and Lending Act 

Violations of truth in lending act 

Creditors are liable for violation of the disclosure requirements, regardless of whether the consumer was harmed by the nondisclosure, UNLESS: 

    The creditor corrects the error within 60 days of discovery and prior to written suit or written notice from the consumer , or 

    The error is the result of bona fide error . The creditor bears the burden of proving by a preponderance of the evidence that: 

          * The violation was unintentional. 

          * The error occurred notwithstanding compliance with procedures reasonably adapted to avoid such error. (Error of legal judgment with respect to creditor's TILA obligations not a bona fide error.) 

Civil remedies for failure to comply with TILA requirements : 

    Action may be brought in any U.S. district court or in any other competent court within one year from the date on which the violation occurred. This limitation does not apply when TILA violations are asserted as a defense, set-off, or counterclaim, except as otherwise provided by state law. 

    Private remedies - applicable to violations of provisions regarding credit transactions, credit billing, and consumer leases. 

          * Actual damages in all cases. 

          * Attorneys' fees and court costs for successful enforcement and rescission actions. 

          * Statutory damages. 

          * (1) For individual actions, double the correctly calculated finance charge but not less than $100 or more than $1,000 for individual actions. 

          * For class actions, an amount allowed by the court with no required minimum recovery per class member to a maximum of $500,000 or 1% of the creditor's net worth, whichever is less. 

          * Can be imposed on creditors who fail to comply with specified TILA disclosure requirements, with the right of rescission, with the provisions concerning credit cards, or with the fair credit billing requirements. 

Enforcement by administrative agencies. 

    The enforcement scheme for banks includes the Federal Reserve System, the Federal Deposit Insurance Corporation, and other agencies. The enforcement agency responsible for creditors not subject to the authority of any specific enforcement agency is the Federal Trade Commission. Nine separate agencies currently have enforcement responsibilities. 

    Enforcement agencies can: 

          Issue cease and desist orders or hold hearings pursuant to which creditors are required to adjust debtors' accounts to ensure that the debtor is not required to pay a finance charge in excess of the finance charge actually disclosed or the dollar equivalent of the annual percentage rate actually disclosed, whichever is lower. 

          If the FTC determines in a cease and desist proceeding against a particular individual or firm that a given practice is "unfair or deceptive," it may proceed against any other individual or firm for knowingly engaging in the forbidden practice, even if that entity was not involved in the previous proceeding.  

Criminal penalties - Willful and knowing violations of TILA permit imposition of a fine of $5,000, imprisonment for up to one year, or both. 

up 5. Truth in lending act: 3-day cooling off period 

    In addition to remedies described above, consumers who enter home equity loans may also have rescission rights . Under TILA, a consumer may rescind a consumer credit transaction involving a non-purchase-money security interest in the consumer's principal dwelling 

          Within 3 business days if all TILA disclosure requirements met, or 

          During an extended statutory period for TILA disclosure violations such as: 

              Failure to give adequate notice of right to rescind, 

              Failure to give adequate TILA credit term disclosures.