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Lautenberg Calls for Swift Passage of Credit Card Reform Act
Legislation Co-Sponsored by N.J. Senator Would Protect Consumers
from Unfair Credit Card Industry Practices
Lautenberg Press Office (202) 224-3224
Wednesday, May 13,
2009
WASHINGTON, DC – Sen. Frank R. Lautenberg (D-NJ) today called for swift passage of legislation he strongly supports to protect consumers from deceitful credit card companies by ending abusive fees and rate increases, ensuring more disclosure and strengthening oversight.
“Credit card reform is long overdue,” Sen. Lautenberg said. “This bill would protect consumers from deceitful credit card practices like sudden rate increases or exorbitant fees. We must protect consumers and work to ensure they are not taken advantage of by manipulative credit card companies looking to prey upon their customers.”
The legislation co-sponsored by Sen. Lautenberg, the Credit Card Accountability Responsibility and Disclosure Act (CARD), would protect consumers from unfair and unacceptable credit card practices by prohibiting arbitrary interest rate increases and universal default on existing balances; prohibiting card issuers from increasing rates on a cardholder in the first year after a credit card account is opened and by requiring any promotional rates to last at least six months.
The CARD Act would require a 45-day notice before imposing an interest rate increase and require that credit card companies apply payments to the card balance with the highest interest rate first, helping consumers to bring down their debt instead of prolonging it. The bill would also prohibit credit card companies from setting early deadlines for card payments and would require card statements to be mailed 21 days prior to the due date.
The Act would stop companies from applying interest charges on debt paid on time; prohibit card companies from issuing late fees if the card issuer delayed crediting the payment; and would require that payment at local branches be applied the same-day; and require penalty fees to be reasonable and proportional to the omission or violation.
The CARD Act would establish requirements that credit card companies and consumers under the age of 21 must complete before a card can be issued, limit the amount of prescreened offers sent to consumers under 21, and stop companies from increasing the credit card limit without obtaining approval to do so from the card holder’s cosigner. The CARD Act would also eliminate declining values and hidden fees in gift cards and require gift cards to have a five-year lifespan.
The CARD Act also would take aggressive steps to enhance disclosure requirements to increase a consumer’s awareness of their finances, including requiring credit card companies to: disclose to consumers upon card renewal when the card terms have changed; disclose how long it would take a cardholder to pay off the card balance if only the minimum monthly payment is made; and reveal in the billing statement when the payment is due and the late payment penalties.
The bill would require broad systemic attention to this issue by requiring each credit card issuer to post credit card agreements on the Internet and provide those agreements to the Federal Reserve Board. The legislation would also require the Federal Reserve Board to review the consumer credit card market, including: terms of credit card agreements, practices of credit card issuers and the cost and availability of consumer credit. The measure would also increase penalties for card companies that violate the Truth in Lending Act as it applies to credit card customers.
The legislation was authored by Sen. Christopher Dodd (D-CT) and, in addition to Sen. Lautenberg, was cosponsored by more than 20 Senators.
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