Fair Credit and Charge Card Disclosure Act of 1988

102 STAT. 2960 PUBLIC LAW 100-583—NOV. 3, 1988
Public Law 100-583
100th Congress
An Act
Nov 3 1988 '^° provide for more detailed and uniform disclosure by credit and charge card issuers
' with respect to information relating to interest rates and other fees which may be
[H.R. 515J incurred by consumers through the use of any credit or charge card.
Be it enacted by the Senate and House of Representatives of the Fair Credit and United States of America in Congress assembled, Charge Card
Disclosure Act of SECTION 1. SHORT TITLE.
1988
15 use 1601 This Act may be cited as the "Fair Credit and Charge Card
note. Disclosure Act of 1988".
SEC. 2. CREDIT AND CHARGE CARD DISCLOSURE REQUIREMENTS.
(a) DISCLOSURE IN CONNECTION WITH CREDIT CARD AND CHARGE
CARD APPUCATIONS AND SOUCITATIONS.—Section 127 of the Truth in
Lending Act (15 U.S.C. 1637) is amended by adding at the end
thereof the following new subsections:
"(c) DISCLOSURE IN CREDIT AND CHARGE CARD APPLICATIONS AND
SOLICITATIONS.—
"(1) DIRECT MAIL APPLICATIONS AND SOUCITATIONS.—
"(A) INFORMATION IN TABULAR FORMAT.—Any application
to open a credit card account for any person under an open
end consumer credit plan, or a solicitation to open such an
account without requiring an application, that is mailed to
consumers shall disclose the following information, subject
to subsection (e) and section 122(c):
"(i) ANNUAL PERCENTAGE RATES.—
"(I) Each annual percentage rate applicable to
extensions of credit under such credit plan.
"(II) Where an extension of credit is subject to a
variable rate, the fact that the rate is variable, the
annual percentage rate in effect at the time of the
mailing, and how the rate is determined.
"(Ill) Where more than one rate applies, the
range of balances to which each rate applies,
"(ii) ANNUAL AND OTHER FEES.—
"(I) Any annual fee, other periodic fee, or mem­
bership fee imposed for the issuance or availability
of a credit card, including any account mainte­
nance fee or other charge imposed based on activ­
ity or inactivity for the account during the billing
cycle.
"(II) Any minimum finance charge imposed for
each period during which any extension of credit
which is subject to a finance charge is outstanding.
"(Ill) Any transaction charge imposed in connec­
tion with use of the card to purchase goods or
services,
"(iii) GRACE PERIOD.— PUBLIC LAW 100-583—NOV. 3, 1988 102 STAT. 2961
"(I) The date by which or the period within
which any credit extended under such credit plan
for purch£ises of goods or services must be repaid to
avoid incurring a finance charge, and, if no such
period is offered, such fact shall be clearly stated.
"(11) If the length of such 'grace period' varies,
the card issuer may disclose the range of days in
the grace period, the minimum number of days in
the grace period, or the average number of days in
the grace period, if the disclosure is identified as
such,
"(iv) BALANCE CALCULATION METHOD.—
"(I) The name of the balance calculation method
used in determining the balance on which the
finance charge is computed if the method used has
been defined by the Board, or a detailed expla­
nation of the balance calculation method used if
the method has not been so defined.
"(II) In prescribing regulations to carry out this
clause, the Board shall define and name not more
than the 5 balance calculation methods determined
by the Board to be the most commonly used
methods.
"(B) OTHER INFORMATION.—In addition to the information
required to be disclosed under subparagraph (A), each ap­
plication or solicitation to which such subparagraph applies
shgdl disclose clearly and conspicuously the following
information, subject to subsections (e) and (f):
"(i) CASH ADVANCE FEE.—Any fee imposed for an
extension of credit in the form of cash,
"(ii) LATE FEE.—Any fee imposed for a late payment,
"(iii) OVER-THE-UMIT FEE.—Any fee imposed in
connection with an extension of credit in excess of the
amount of credit authorized to be extended with re­
spect to such account.
"(2) TELEPHONE SOUCITATIONS.—
"(A) IN GENERAL.—In any telephone solicitation to open a
credit card account for any person under an open end
consumer credit plan, the person making the solicitation
shall orally disclose the information described in paragraph
(IXA).
"(B) EXCEPTION.—Subparagraph (A) shall not apply to
any telephone solicitation if—
"(i) the credit card issuer—
"(I) does not impose any fee described in para­
graph (l)(AXii)(I); or
"(II) does not impose any fee in connection with
telephone solicitations unless the consumer sig­
nifies acceptance by using the card;
"(ii) the card issuer discloses clearly and conspicu­
ously in writing the information described in para­
graph (1) within 30 days after the consumer requests
the card, but in no event later than the date of delivery
of the card; and
"(iii) the card issuer discloses clearly and conspicu­
ously that the consumer is not obligated to accept the
card or account and the consumer will not be obligated 102 STAT. 2962 PUBLIC LAW 100-583—NOV. 3, 1988
to pay any of the fees or charges disclosed unless the
consumer elects to accept the card or account by using
the card.
"(3) APPLICATIONS AND SOUCITATIONS BY OTHER MEANS.—
"(A) IN GENERAL.—Any application to open a credit card
account for any person under an open end consumer credit
plan, and any solicitation to open such an account without
requiring an application, that is made available to the
public or contained in catalogs, magazines, or other publica­
tions shall meet the disclosure requirements of subpara­
graph (B), (C), or (D).
"(B) SPECIFIC INFORMATION.—An application or solicita­
tion described in subparagraph (A) meets the requirement
of this subparagraph if such application or solicitation con­
tains—
"(i) the information—
"(I) described in paragraph (IXA) in the form
required under section 122(c) of this chapter, sub­
ject to subsection (e), and
"(II) described in paragraph (1)(B) in a clear and
conspicuous form, subject to subsections (e) and (f);
"(ii) a statement, in a conspicuous and prominent
location on the application or solicitation, that—
"(I) the information is accurate as of the date the
application or solicitation was printed;
"(II) the information contained in the application
or solicitation is subject to change after such date;
and
"(III) the applicant should contact the creditor
for information on any change in the information
contained in the application or solicitation since it
was printed;
"(iii) a clear and conspicuous disclosure of the date
the application or solicitation was printed; and
"(iv) a disclosure, in a conspicuous and prominent
location on the application or solicitation, of a toll free
telephone number or a mailing address at which the
applicant may contact the creditor to obtain any
change in the information provided in the application
or solicitation since it was printed.
"(C) GENERAL INFORMATION WITHOUT ANY SPECIFIC
TERM.—An application or solicitation described in subpara­
graph (A) meets the requirement of this subparagraph if
such application or solicitation—
"(i) contains a statement, in a conspicuous and
prominent location on the application or solicitation,
that—
"(I) there are costs associated with the use of
credit cards; and
"(II) the applicant may contact the creditor to
request disclosure of specific information of such
costs by calling a toll free telephone number or by
writing to an address, specified in the application;
"(ii) contains a disclosure, in a conspicuous and
prominent location on the application or solicitation, of
a toll free telephone number and a mailing address at PUBLIC LAW 100-583—NOV. 3, 1988 102 STAT. 2963
which the applicant may contact the creditor to obtain
such information; and
"(iii) does not contain any of the items described in
paragraph (1).
"(D) APPUCATIONS OR SOLICITATIONS CONTAINING SUBSEC­
TION (a) DISCLOSURES.—An appUcation or soUcitation meets
the requirement of this subparagraph if it contains, or is
accompanied by—
"(i) the disclosures required by paragraphs (1)
through (6) of subsection (a);
"(ii) the disclosures required by subparagraphs (A)
and (B) of paragraph (1) of this subsection included
clearly and conspiciously (except that the provisions of
section 122(c) shall not apply); and
"(iii) a toll free telephone number or a mailing ad­
dress at which the applicant may contact the creditor
to obtain any change in the information provided.
"(E) PROMPT RESPONSE TO INFORMATION REQUESTS.—Upon
receipt of a request for any of the information referred to in
subparagraph (B), (C), or (D), the card issuer or the agent of
such issuer shall promptly disclose all of the information
described in paragraph (1).
'(4) CHARGE CARD APPUCATIONS AND SOLICITATIONS.—
"(A) IN GENERAL.—Any application or solicitation to open
a charge card account shall disclose clearly and conspicu­
ously the following information in the form required by
section 122(c) of this chapter, subject to subsection (e):
"(i) Any annual fee, other periodic fee, or member­
ship fee imposed for the issuance or availability of the
charge card, including any account maintenance fee or
other charge imposed based on activity or inactivity for
the account during the billing cycle.
"(ii) Any transaction charge imposed in connection
with use of the card to purchase goods or services.
"(iii) A statement that charges incurred by use of the
charge card are due and payable upon receipt of a
periodic statement rendered for such charge card ac­
count.
"(B) OTHER INFORMATION.—In addition to the information
required to be disclosed under subparagraph (A), each writ­
ten application or solicitation to which such subparagraph
applies shall disclose clearly and conspicuously the follow­
ing information, subject to subsections (e) and (f):
"(i) CASH ADVANCE FEE.—Any fee imposed for an
extension of credit in the form of cash,
"(ii) LATE FEE.—Any fee imposed for a late payment,
"(iii) OVER-THE-LIMIT FEE.—Any fee imposed in
connection with an extension of credit in excess of the
amount of credit authorized to be extended with re­
spect to such account.
"(C) APPUCATIONS AND SOUCITATIONS BY OTHER MEANS.—
Any application to open a charge card account, and any
solicitation to open such an account without requiring an
application, that is made available to the public or con­
tained in catalogs, magazines, or other publications shall
contain—
"(i) the information— 102 STAT. 2964 PUBLIC LAW 100-583—NOV. 3, 1988
"(I) described in subparagraph (A) in the form
required under section 122(c) of this chapter, sub­
ject to subsection (e), and
"(11) described in subparagraph (B) in a clear and
conspicuous form, subject to subsections (e) and (f);
"(ii) a statement, in a conspicuous and prominent
location on the application or solicitation, that—
"(I) the information is accurate as of the date the
application or solicitation was printed;
(II) the information contained in the application
or solicitation is subject to change after such date;
and
"(III) the applicant should contact the creditor
for information on any change in the information
contained in the application or solicitation since it
was printed;
"(iii) a clear and conspicuous disclosure of the date
the application or solicitation WEIS printed; and
"(iv) a disclosure, in a conspicuous and prominent
location on the application or solicitation, of a toll free
telephone number or a mailing address at which the
applicant may contact the creditor to obtain any
change in the information provided in the application
or solicitation since it was printed.
"(D) ISSUERS OF CHARGE CARDS WHICH PROVIDE ACCESS TO
OPEN END CONSUMER CREDIT PLANS.—If a charge card per­
mits the card holder to receive an extension of credit under
an open end consumer credit plan, which is not maintained
by the charge card issuer, the charge card issuer may
provide the information described in subparagraphs (A) and
(B) in the form required by such subparagraphs in lieu of
the information required to be provided under paragraph
(1), (2), or (3) with respect to any credit extended under such
plan, if the charge card issuer discloses clearly and
conspicuously to the consumer in the application or solicita­
tion that—
"(i) the charge card issuer will make an independent
decision as to whether to issue the card;
"(ii) the charge card may arrive before the decision is
made with respect to an extension of credit under an
open end consumer credit plan; and
"(iii) approval by the charge card issuer does not
constitute approval by the issuer of the extension of
credit.
The information required to be disclosed under paragraph
(1) shall be provided to the charge card holder by the
creditor which maintains such open end consumer credit
plan before the first extension of credit under such plan.
"(E) CHARGE CARD DEFINED.—For the purposes of this
subsection, the term 'charge card' means a card, plate, or
other single credit device that may be used from time to
time to obtain credit which is not subject to a finance
charge.
"(5) REGULATORY AUTHORITY OF THE BOARD.—The Board may,
by regulation, require the disclosure of information in addition
to that otherwise required by this subsection or subsection (d),
and modify any disclosure of information required by this PUBLIC LAW 100-583—NOV. 3, 1988 102 STAT. 2965
subsection or subsection (d), in any application to open a credit
card account for any person under an open end consumer credit
plan or any application to open a charge card account for any
person, or a solicitation to open any such account without
requiring an application, if the Board determines that such
action is necessary to carry out the purposes of, or prevent
evEisions of, any paragraph of this subsection.
"(d) DISCLOSURE PRIOR TO RENEWAL.—
"(1) IN GENERAL.—Except as provided in paragraph (2), a card
issuer that imposes any fee described in subsection (cXlXAXiiXD
or (cX4XAXi) shall transmit to a consumer at least 30 days prior
to the scheduled renewal date of the consumer's credit or charge
card account a clear and conspicuous disclosure of—
"(A) the date by which, the month by which, or the billing
period at the close of which, the account will expire if not
renewed;
"(B) the information described in subsection (cXlXA) or
(cX4XA) that would apply if the account were renewed,
subject to subsection (e); and
"(C) the method by which the consumer may terminate
continued credit availability under the account.
"(2) SPECIAL RULE FOR CERTAIN DISCLOSURES.—
"(A) IN GENERAL.—The disclosures required by this
subsection may be provided—
"(i) prior to posting a fee described in subsection
(cXlXAXiiXI) or (cX4XAXi) to the account, or
"(ii) with the periodic billing statement first disclos­
ing that the fee has been posted to the account.
"(B) LIMITATION ON USE OF SPECIAL RULE.—Disclosures
may be provided under subparagraph (A) only if—
"(i) the consumer is given a 30-day period to avoid
pa3anent of the fee or to have the fee recredited to the
account in any case where the consumer does not wish
to continue the availability of the credit; and
"(ii) the consumer is permitted to use the card during
such period without incurring an obligation to pay such
fee.
"(3) SHORT-TERM RENEWALS.—The Board may by regulation
provide for fewer disclosures than are required by paragraph (1)
in the case of an account which is renewable for a period of less
than 6 months.
"(e) OTHER RULES FOR DISCLOSURES UNDER SUBSECTIONS (C) AND
(d).-
"(1) FEES DETERMINED ON THE BASIS OF A PERCENTAGE.—If the
amount of any fee required to be disclosed under subsection (c)
or (d) is determined on the basis of a percentage of another
amount, the percentage used in making such determination and
the identification of the amount against which such percentage
is applied shall be disclosed in lieu of the amount of such fee.
"(2) DISCLOSURE ONLY OF FEES ACTUALLY IMPOSED.—If a credit
or charge card issuer does not impose any fee required to be
disclosed under any provision of subsection (c) or (d), such
provision shall not apply with respect to such issuer.
"(f) DISCLOSURE OF RANGE OF CERTAIN FEES WHICH VARY BY STATE
ALLOWED.—If the amount of any fee required to be disclosed by a
credit or charge card issuer under paragraph (1)(B), (3XBXiXII),
(4XB), or (4XCXiXII) of subsection (c) varies from State to State, the 102 STAT. 2966 PUBLIC LAW 100-583—NOV. 3, 1988
card issuer may disclose the range of such fees for purposes of
subsection (c) in lieu of the amount for each applicable State, if such
disclosure includes a statement that the amount of such fee varies
from State to State.".
(b) CERTAIN INFORMATION REQUIRED TO BE DISCLOSED IN TABULAR
FORM.—Section 122 of the Truth in Lending Act (15 U.S.C. 1632) is
amended—
(1) in the third sentence of subsection (a), by striking out
"Regulations" and inserting in lieu thereof "Except as provided
in subsection (c), regulations"; and
(2) by adding at the end thereof the following new subsection:
"(c) TABULAR FORMAT REQUIRED FOR CERTAIN DISCLOSURES UNDER
SECTION 127(C).—
"(1) IN GENERAL.—The information described in paragraphs
(1)(A), (3XB)(iXI), (4)(A), and (4)(CKiXI) of section 127(c) shall he-
Regulations. "(A) disclosed in the form and manner which the Board
shall prescribe by regulations; and
"(B) placed in a conspicuous and prominent location on or
with any written application, solicitation, or other docu­
ment or paper with respect to which such disclosure is
required.
"(2) TABULAR FORMAT.—
"(A) FORM OF TABLE TO BE PRESCRIBED.—In the regulations
prescribed under paragraph (1)(A) of this subsection, the
Board shall require that the disclosure of such information
shall, to the extent the Board determines to be practicable
and appropriate, be in the form of a table which—
'(i) contains clear and concise headings for each item
of such information; and
"(ii) provides a clear and concise form for stating
each item of information required to be disclosed under
each such heading.
"(B) BOARD DISCRETION IN PRESCRIBING ORDER AND WORD­
ING OF TABLE.—In prescribing the form of the table under
subparagraph (A), the Board may—
"(i) list the items required to be included in the table
in a different order than the order in which such items
are set forth in paragraph (IXA) or (4)(A) of section
127(c); and
"(ii) subject to subparagraph (C), employ terminology
which is different than the terminology which is em­
ployed in section 127(c) if such terminology conveys
substantially the same meaning.
"(C) GRACE PERIOD.—Either the heading or the statement
under the heading which relates to the time period referred
to in section 127(cXl)(AXiii) shall contain the term 'grace
period'.".
SEC. 3. CIVIL LIABILITY.
Section 130(a) of the Truth in Lending Act (15 U.S.C. 1640) is
amended—
(1) by striking out "in section 127" in the third sentence and
inserting in lieu thereof "in subsections (a) and (b) of section
127"; and
(2) by inserting after the third sentence the following: "In
connection with the disclosures referred to in subsection (c) or
(d) of section 127, a card issuer shall have a liability under this PUBLIC LAW 100-583—NOV. 3, 1988 102 STAT. 2967
section only to a cardholder who pays a fee described in section
127(c)(l)(A)(ii)(I) or section 127(c)(4)(A)(i) or who uses the credit
card or charge card.".
SEC. 4. COORDINATION WITH OTHER LAWS.
Section 111 of the Truth in Lending Act (15 U.S.C. 1610) is
amended—
(1) in subsection (a)(1), by striking out "Chapters 1, 2, and 3"
and inserting in lieu thereof "Except as provided in subsection
(e), chapters 1, 2, and 3"; and
(2) by adding at the end thereof the following new subsection:
"(e) CERTAIN CREDIT AND CHARGE CARD APPUCATION AND SOLICITA­
TION DISCLOSURE PROVISIONS.—The provisions of subsection (c) of
section 122 and subsections (c), (d), (e), and (f) of section 127 shall
supersede any provision of the law of any State relating to the
disclosure of information in any credit or charge card application or
solicitation which is subject to the requirements of section 127(c) or
any renewal notice which is subject to the requirements of section
127(d), except that any State may employ or establish State laws for
the purpose of enforcing the requirements of such sections.".
SEC. 5. REPORTING TO THE BOARD OF GOVERNORS.
Section 136 of the Truth in Lending Act (15 U.S.C. 1646) is
amended—
(1) by redesignating subsection (b) as subsection (c);
(2) by inserting after subsection (a) the following new subsec­
tion:
"(b) CREDIT CARD PRICE AND AVAILABIUTY INFORMATION.—
"(1) COLLECTION REQUIRED.—The Board shall collect, on a
semiannual basis, credit card price and availability information,
including the information required to be disclosed under section
127(c) of this chapter, from a broad sample of financial institu­
tions which offer credit card services.
"(2) SAMPLE REQUIREMENTS.—The broad sample of financial
institutions required under paragraph (1) shall include—
"(A) the 25 largest issuers of credit cards; and
"(B) not less than 125 additional financial institutions
selected by the Board in a manner that ensures—
"(i) an equitable geographical distribution within the
sample; and
"(ii) the representation of a wide spectrum of institu­
tions within the sample.
"(3) REPORT OF INFORMATION FROM SAMPLE.—Each financial
institution in the broad sample established pursuant to para­
graph (2) shall report the information to the Board in accord­
ance with such regulations or orders as the Board may
prescribe.
"(4) PUBUC AVAILABILITY OF COLLECTED INFORMATION, REPORT
TO CONGRESS.—The Board shall—
"(A) make the information collected pursuant to this
subsection available to the public upon request; and
"(B) report such information semiannually to Congress.";
and
(3) by striking out "subsection (a)" in subsection (c), £is redesig­
nated, and inserting in lieu thereof "subsections (a) and (b)". State and local
governments.
Banks and
banking. 102 STAT. 2968 PUBLIC LAW 100-583—NOV. 3, 1988
SEC. 6. INSURANCE PROVIDED IN CONNECTION WITH CERTAIN OPEN END
CREDIT CARD PLANS.
Section 127 of the Truth in Lending Act (15 U.S.C. 1637) is
amended by inserting after subsection (f) (as added by section 2(a) of
this Act) the following new subsection:
"(g) INSURANCE IN CONNECTION WITH CERTAIN OPEN END CREDIT
CARD PLANS.—
"(1) CHANGE IN INSURANCE CARRIER.—Whenever a card issuer
that offers any guarantee or insurance for repayment of all or
part of the outstanding balance of an open end credit card plan
proposes to change the person providing that guarantee or
insurance, the card issuer shall send each insured consumer
written notice of the proposed change not less than 30 days
prior to the change, including notice of any increase in the rate
or substantial decrease in coverage or service which will result
from such change. Such notice may be included on or with the
monthly statement provided to the consumer prior to the month
in which the proposed change would take effect.
"(2) NOTICE OF NEW INSURANCE COVERAGE.—In any case in
which a proposed change described in paragraph (1) occurs, the
insured consumer shall be given the name and address of the
new guarantor or insurer and a copy of the policy or group
certificate containing the basic terms and conditions, including
the premium rate to be charged.
"(3) RIGHT TO DISCONTINUE GUARANTEE OR INSURANCE.—The
notices required under paragraphs (1) and (2) shall each include
a statement that the consumer has the option to discontinue the
insurance or guarantee.
"(4) No PREEMPTION OF STATE LAW.—No provision of this
subsection shall be construed as superseding any provision of
State law which is applicable to the regulation of insurance.
"(5) BOARD DEFINITION OF SUBSTANTIAL DECREASE IN COVERAGE
OR SERVICE.—The Board shall define, in regulations, what con­
stitutes a 'substantial decrease in coverage or service' for pur­
poses of paragraph (1).".
15 use 1637 SEC. 7. EFFECTIVE DATE.
Any regulation required to be prescribed by the Board under the
amendments made by section 2 shall—
(1) take effect not later than the end of the 150-day period
beginning on the date of the enactment of this Act; and
(2) apply only with respect to applications, solicitations, and
other material distributed after the end of the 150-day period
beginning after the end of the period referred to in paragraph
(1), except that—
(A) in the case of applications and solicitations subject to
paragraph (3) or (4XC) of section 127(c) of the Truth in
Lending Act (as added by section 2), such period shall be 240
days; and
(B) any card issuer may, at its option, comply with the
requirements of the amendments made by this Act prior to
the applicable effective date, in which case the amendments
made by this" Act shall be fully applicable to such card
issuer. PUBLIC LAW 100-583—NOV. 3, 1988 102 STAT. 2969
SEC. 8. REPORTS TO THE CONGRESS. 15 USC 1637
Not later than 1 year after the regulations prescribed under ^° ®'
section 7 of this Act become effective and annually thereafter, the
Board of Governors of the Federal Reserve System shall transmit to
the Congress a report containing an assessment by the Board of the
profitability of credit card operations of depository institutions,
including an analysis of any impact of the amendments made by
this Act on such profitability.
Approved November 3, 1988.
LEGISLATIVE HISTORY—H.R. 515:
HOUSE REPORTS: No. 100-323 (Comm. on Banking, Finance and Urban Affairs) and
No. 100-1069 (Comm. of Conference).
SENATE REPORTS: No. 100-259 (Comm. on Banking, Housing, and Urban Affairs).
CONGRESSIONAL RECORD:
Vol. 133 (1987): Oct. 28, considered and passed House.
Dec. 21, considered and passed Senate, amended.
Vol. 134 (1988): Oct. 11, Senate agreed to conference report.
Oct. 19, House agreed to conference report.