15 U.S.C. § 1666i — Assertion by cardholder against card

Page 1543 TITLE 15—COMMERCE AND TRADE § 1666i pose of inducing payment by cash, check, or other means not involving the use of a credit card shall not constitute a finance charge as determined under sec- tion 1605 of this title, if such discount is offered to all prospective buyers and its availability is disclosed to all prospective buyers clearly and conspicuously in ac- cordance with regulations of the Board’’. 1976—Subsec. (a). Pub. L. 94–222 temporarily des- ignated existing provisions as par. (1) and added par. (2). See Termination Date of 1976 Amendment note below. Statutory Notes and Related Subsidiaries TERMINATION DATE OF 1976 AMENDMENT Section 3(c)(2) of Pub. L. 94–222, as amended by Pub. L. 95–630, title XV, § 1501, Nov. 10, 1978, 92 Stat. 3713; Pub. L. 97–25, title II, § 201, July 27, 1981, 95 Stat. 44, pro- vided that: ‘‘The amendments made by paragraph (1) [amending this section] shall cease to be effective on February 27, 1984.’’ NULLIFICATION OF BOARD RULES AND REGULATIONS UNDER SUBSECTION (b) OF THIS SECTION IN EFFECT ON JULY 26, 1981 Pub. L. 97–25, title I, § 103, July 27, 1981, 95 Stat. 144, provided that: ‘‘Any rule or regulation of the Board of Governors of the Federal Reserve System pursuant to section 167(b) of the Truth in Lending Act [subsec. (b) of this section], as such section was in effect on the day before the date of enactment of this Act [July 27, 1981], is null and void.’’ § 1666g. Tie-in services prohibited for issuance of credit card Notwithstanding any agreement to the con- trary, a card issuer may not require a seller, as a condition to participating in a credit card plan, to open an account with or procure any other service from the card issuer or its sub- sidiary or agent. (Pub. L. 90–321, title I, § 168, as added Pub. L. 93–495, title III, § 306, Oct. 28, 1974, 88 Stat. 1515.) § 1666h. Offset of cardholder’s indebtedness by issuer of credit card with funds deposited with issuer by cardholder; remedies of credi- tors under State law not affected (a) Offset against consumer’s funds A card issuer may not take any action to off- set a cardholder’s indebtedness arising in con- nection with a consumer credit transaction under the relevant credit card plan against funds of the cardholder held on deposit with the card issuer unless— (1) such action was previously authorized in writing by the cardholder in accordance with a credit plan whereby the cardholder agrees pe- riodically to pay debts incurred in his open end credit account by permitting the card issuer periodically to deduct all or a portion of such debt from the cardholder’s deposit ac- count, and (2) such action with respect to any out- standing disputed amount not be taken by the card issuer upon request of the cardholder. In the case of any credit card account in exist- ence on the effective date of this section, the previous written authorization referred to in clause (1) shall not be required until the date (after such effective date) when such account is renewed, but in no case later than one year after such effective date. Such written authorization shall be deemed to exist if the card issuer has previously notified the cardholder that the use of his credit card account will subject any funds which the card issuer holds in deposit accounts of such cardholder to offset against any amounts due and payable on his credit card account which have not been paid in accordance with the terms of the agreement between the card issuer and the cardholder. (b) Attachments and levies This section does not alter or affect the right under State law of a card issuer to attach or otherwise levy upon funds of a cardholder held on deposit with the card issuer if that remedy is constitutionally available to creditors gen- erally. (Pub. L. 90–321, title I, § 169, as added Pub. L. 93–495, title III, § 306, Oct. 28, 1974, 88 Stat. 1515.) Editorial Notes REFERENCES IN TEXT For effective date of this section, referred to in sub- sec. (a), see Effective Date note set out under section 1666 of this title. § 1666i. Assertion by cardholder against card issuer of claims and defenses arising out of credit card transaction; prerequisites; limita- tion on amount of claims or defenses (a) Claims and defenses assertible Subject to the limitation contained in sub- section (b), a card issuer who has issued a credit card to a cardholder pursuant to an open end consumer credit plan shall be subject to all claims (other than tort claims) and defenses arising out of any transaction in which the cred- it card is used as a method of payment or exten- sion of credit if (1) the obligor has made a good faith attempt to obtain satisfactory resolution of a disagreement or problem relative to the transaction from the person honoring the credit card; (2) the amount of the initial transaction exceeds $50; and (3) the place where the initial transaction occurred was in the same State as the mailing address previously provided by the cardholder or was within 100 miles from such ad- dress, except that the limitations set forth in clauses (2) and (3) with respect to an obligor’s right to assert claims and defenses against a card issuer shall not be applicable to any trans- action in which the person honoring the credit card (A) is the same person as the card issuer, (B) is controlled by the card issuer, (C) is under direct or indirect common control with the card issuer, (D) is a franchised dealer in the card issuer’s products or services, or (E) has obtained the order for such transaction through a mail solicitation made by or participated in by the card issuer in which the cardholder is solicited to enter into such transaction by using the cred- it card issued by the card issuer. (b) Amount of claims and defenses assertible The amount of claims or defenses asserted by the cardholder may not exceed the amount of credit outstanding with respect to such trans- action at the time the cardholder first notifies the card issuer or the person honoring the credit Page 1544 TITLE 15—COMMERCE AND TRADE § 1666i–1 card of such claim or defense. For the purpose of determining the amount of credit outstanding in the preceding sentence, payments and credits to the cardholder’s account are deemed to have been applied, in the order indicated, to the pay- ment of: (1) late charges in the order of their entry to the account; (2) finance charges in order of their entry to the account; and (3) deb- its to the account other than those set forth above, in the order in which each debit entry to the account was made. (Pub. L. 90–321, title I, § 170, as added Pub. L. 93–495, title III, § 306, Oct. 28, 1974, 88 Stat. 1515.) § 1666i–1. Limits on interest rate, fee, and finance charge increases applicable to outstanding balances (a) In general In the case of any credit card account under an open end consumer credit plan, no creditor may increase any annual percentage rate, fee, or finance charge applicable to any outstanding balance, except as permitted under subsection (b). (b) Exceptions The prohibition under subsection (a) shall not apply to— (1) an increase in an annual percentage rate upon the expiration of a specified period of time, provided that— (A) prior to commencement of that period, the creditor disclosed to the consumer, in a clear and conspicuous manner, the length of the period and the annual percentage rate that would apply after expiration of the pe- riod; (B) the increased annual percentage rate does not exceed the rate disclosed pursuant to subparagraph (A); and (C) the increased annual percentage rate is not applied to transactions that occurred prior to commencement of the period; (2) an increase in a variable annual percent- age rate in accordance with a credit card agreement that provides for changes in the rate according to operation of an index that is not under the control of the creditor and is available to the general public; (3) an increase due to the completion of a workout or temporary hardship arrangement by the obligor or the failure of the obligor to comply with the terms of a workout or tem- porary hardship arrangement, provided that— (A) the annual percentage rate, fee, or fi- nance charge applicable to a category of transactions following any such increase does not exceed the rate, fee, or finance charge that applied to that category of transactions prior to commencement of the arrangement; and (B) the creditor has provided the obligor, prior to the commencement of such arrange- ment, with clear and conspicuous disclosure of the terms of the arrangement (including any increases due to such completion or fail- ure); or (4) an increase due solely to the fact that a minimum payment by the obligor has not been received by the creditor within 60 days after the due date for such payment, provided that the creditor shall— (A) include, together with the notice of such increase required under section 1637(i) of this title, a clear and conspicuous written statement of the reason for the increase and that the increase will terminate not later than 6 months after the date on which it is imposed, if the creditor receives the required minimum payments on time from the obli- gor during that period; and (B) terminate such increase not later than 6 months after the date on which it is im- posed, if the creditor receives the required minimum payments on time during that pe- riod. (c) Repayment of outstanding balance (1) In general The creditor shall not change the terms gov- erning the repayment of any outstanding bal- ance, except that the creditor may provide the obligor with one of the methods described in paragraph (2) of repaying any outstanding bal- ance, or a method that is no less beneficial to the obligor than one of those methods. (2) Methods The methods described in this paragraph are— (A) an amortization period of not less than 5 years, beginning on the effective date of the increase set forth in the notice required under section 1637(i) of this title; or (B) a required minimum periodic payment that includes a percentage of the out- standing balance that is equal to not more than twice the percentage required before the effective date of the increase set forth in the notice required under section 1637(i) of this title. (d) Outstanding balance defined For purposes of this section, the term ‘‘out- standing balance’’ means the amount owed on a credit card account under an open end consumer credit plan as of the end of the 14th day after the date on which the creditor provides notice of an increase in the annual percentage rate, fee, or fi- nance charge in accordance with section 1637(i) of this title. (Pub. L. 90–321, title I, § 171, as added Pub. L. 111–24, title I, § 101(b)(2), May 22, 2009, 123 Stat. 1736.) Editorial Notes PRIOR PROVISIONS A prior section 171 of Pub. L. 90–321 was renumbered section 173 and is classified to section 1666j of this title. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective 9 months after May 22, 2009, except as otherwise specifically provided, see section 3 of Pub. L. 111–24, set out as an Effective Date of 2009 Amend- ment note under section 1602 of this title.