15 U.S.C. § 1665b — Advertising of open end consumer credit

Page 1537 TITLE 15—COMMERCE AND TRADE § 1665b § 1665b. Advertising of open end consumer credit plans secured by consumer’s principal dwell- ing (a) In general If any advertisement to aid, promote, or as- sist, directly or indirectly, the extension of con- sumer credit through an open end consumer credit plan under which extensions of credit are secured by the consumer’s principal dwelling states, affirmatively or negatively, any of the specific terms of the plan, including any peri- odic payment amount required under such plan, such advertisement shall also clearly and con- spicuously set forth the following information, in such form and manner as the Bureau may re- quire: (1) Loan fees and opening cost estimates Any loan fee the amount of which is deter- mined as a percentage of the credit limit ap- plicable to an account under the plan and an estimate of the aggregate amount of other fees for opening the account, based on the credi- tor’s experience with the plan and stated as a single amount or as a reasonable range. (2) Periodic rates In any case in which periodic rates may be used to compute the finance charge, the peri- odic rates expressed as an annual percentage rate. (3) Highest annual percentage rate The highest annual percentage rate which may be imposed under the plan. (4) Other information Any other information the Bureau may by regulation require. (b) Tax deductibility (1) In general If any advertisement described in subsection (a) contains a statement that any interest ex- pense incurred with respect to the plan is or may be tax deductible, the advertisement shall not be misleading with respect to such deductibility. (2) Credit in excess of fair market value Each advertisement described in subsection (a) that relates to an extension of credit that may exceed the fair market value of the dwell- ing, and which advertisement is disseminated in paper form to the public or through the Internet, as opposed to by radio or television, shall include a clear and conspicuous state- ment that— (A) the interest on the portion of the cred- it extension that is greater than the fair market value of the dwelling is not tax de- ductible for Federal income tax purposes; and (B) the consumer should consult a tax ad- viser for further information regarding the deductibility of interest and charges. (c) Certain terms prohibited No advertisement described in subsection (a) with respect to any home equity account may refer to such loan as ‘‘free money’’ or use other terms determined by the Bureau by regulation to be misleading. (d) Discounted initial rate (1) In general If any advertisement described in subsection (a) includes an initial annual percentage rate that is not determined by the index or formula used to make later interest rate adjustments, the advertisement shall also state with equal prominence the current annual percentage rate that would have been applied using the index or formula if such initial rate had not been offered. (2) Quoted rate must be reasonably current The annual percentage rate required to be disclosed under the paragraph (1) rate must be current as of a reasonable time given the media involved. (3) Period during which initial rate is in effect Any advertisement to which paragraph (1) applies shall also state the period of time dur- ing which the initial annual percentage rate referred to in such paragraph will be in effect. (e) Balloon payment If any advertisement described in subsection (a) contains a statement regarding the min- imum monthly payment under the plan, the ad- vertisement shall also disclose, if applicable, the fact that the plan includes a balloon payment. (f) ‘‘Balloon payment’’ defined For purposes of this section and section 1637a of this title, the term ‘‘balloon payment’’ means, with respect to any open end consumer credit plan under which extensions of credit are secured by the consumer’s principal dwelling, any repayment option under which— (1) the account holder is required to repay the entire amount of any outstanding balance as of a specified date or at the end of a speci- fied period of time, as determined in accord- ance with the terms of the agreement pursu- ant to which such credit is extended; and (2) the aggregate amount of the minimum periodic payments required would not fully amortize such outstanding balance by such date or at the end of such period. (Pub. L. 90–321, title I, § 147, as added Pub. L. 100–709, § 2(c), Nov. 23, 1988, 102 Stat. 4730; amend- ed Pub. L. 109–8, title XIII, § 1302(a)(2), Apr. 20, 2005, 119 Stat. 208; Pub. L. 111–203, title X, § 1100A(2), July 21, 2010, 124 Stat. 2107.) Editorial Notes AMENDMENTS 2010—Subsecs. (a), (c). Pub. L. 111–203 substituted ‘‘Bureau’’ for ‘‘Board’’ wherever appearing. 2005—Subsec. (b). Pub. L. 109–8 designated existing provisions as par. (1), inserted par. heading, and added par. (2). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2010 AMENDMENT Amendment by Pub. L. 111–203 effective on the des- ignated transfer date, see section 1100H of Pub. L. 111–203, set out as a note under section 552a of Title 5, Government Organization and Employees. EFFECTIVE DATE OF 2005 AMENDMENT Amendment by Pub. L. 109–8 effective 180 days after Apr. 20, 2005, and not applicable with respect to cases Page 1538 TITLE 15—COMMERCE AND TRADE § 1665c 1 So in original. Probably should be ‘‘Board’’. commenced under Title 11, Bankruptcy, before such ef- fective date, except as otherwise provided, see section 1501 of Pub. L. 109–8, set out as a note under section 101 of Title 11. EFFECTIVE DATE For effective date of section, see Regulations; Effec- tive Date note below. REGULATIONS; EFFECTIVE DATE For provisions relating to promulgation of regula- tions to implement amendment by Pub. L. 100–709 [en- acting this section], and effective date of such amend- ment in connection with those regulations, see section 7 of Pub. L. 100–709, set out as a note under section 1637a of this title. § 1665c. Interest rate reduction on open end con- sumer credit plans (a) In general If a creditor increases the annual percentage rate applicable to a credit card account under an open end consumer credit plan, based on factors including the credit risk of the obligor, market conditions, or other factors, the creditor shall consider changes in such factors in subsequently determining whether to reduce the annual per- centage rate for such obligor. (b) Requirements With respect to any credit card account under an open end consumer credit plan, the creditor shall— (1) maintain reasonable methodologies for assessing the factors described in subsection (a); (2) not less frequently than once every 6 months, review accounts as to which the an- nual percentage rate has been increased since January 1, 2009, to assess whether such factors have changed (including whether any risk has declined); (3) reduce the annual percentage rate pre- viously increased when a reduction is indi- cated by the review; and (4) in the event of an increase in the annual percentage rate, provide in the written notice required under section 1637(i) of this title a statement of the reasons for the increase. (c) Rule of construction This section shall not be construed to require a reduction in any specific amount. (d) Rulemaking The Bureau 1 shall issue final rules not later than 9 months after May 22, 2009, to implement the requirements of and evaluate compliance with this section, and subsections (a), (b), and (c) shall become effective 15 months after May 22, 2009. (Pub. L. 90–321, title I, § 148, as added Pub. L. 111–24, title I, § 101(c), May 22, 2009, 123 Stat. 1737; amended Pub. L. 111–203, title X, § 1100A(2), July 21, 2010, 124 Stat. 2107.) Editorial Notes AMENDMENTS 2010—Subsec. (d). Pub. L. 111–203 substituted ‘‘Bu- reau’’ for ‘‘Board’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2010 AMENDMENT Amendment by Pub. L. 111–203 effective on the des- ignated transfer date, see section 1100H of Pub. L. 111–203, set out as a note under section 552a of Title 5, Government Organization and Employees. 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. § 1665d. Reasonable penalty fees on open end consumer credit plans (a) In general The amount of any penalty fee or charge that a card issuer may impose with respect to a cred- it card account under an open end consumer credit plan in connection with any omission with respect to, or violation of, the cardholder agreement, including any late payment fee, over-the-limit fee, or any other penalty fee or charge, shall be reasonable and proportional to such omission or violation. (b) Rulemaking required The Bureau, in consultation with the Comp- troller of the Currency, the Board of Directors of the Federal Deposit Insurance Corporation, the Director of the Office of Thrift Supervision, and the National Credit Union Administration Board, shall issue final rules not later than 9 months after May 22, 2009, to establish standards for assessing whether the amount of any penalty fee or charge described under subsection (a) is reasonable and proportional to the omission or violation to which the fee or charge relates. Subsection (a) shall become effective 15 months after May 22, 2009. (c) Considerations In issuing rules required by this section, the Bureau shall consider— (1) the cost incurred by the creditor from such omission or violation; (2) the deterrence of such omission or viola- tion by the cardholder; (3) the conduct of the cardholder; and (4) such other factors as the Bureau may deem necessary or appropriate. (d) Differentiation permitted In issuing rules required by this subsection, the Bureau may establish different standards for different types of fees and charges, as appro- priate. (e) Safe harbor rule authorized The Bureau, in consultation with the Comp- troller of the Currency, the Board of Directors of the Federal Deposit Insurance Corporation, the Director of the Office of Thrift Supervision, and the National Credit Union Administration Board, may issue rules to provide an amount for any penalty fee or charge described under sub- section (a) that is presumed to be reasonable and proportional to the omission or violation to which the fee or charge relates. (Pub. L. 90–321, title I, § 149, as added Pub. L. 111–24, title I, § 102(b)(1), May 22, 2009, 123 Stat.