WASHINGTON, Jan 15 (Reuters) - Democratic U.S. lawmakers said on Thursday they reintroduced credit card legislation aimed at curbing “unfair and deceptive” practices against consumers hit by unexpected rate increases and other fees.
The action comes almost one month after the Federal Reserve approved final rules to prohibit a number of highly criticized practices starting next year but lawmakers said the Fed rules failed to go far enough sooner to rein in the industry.
In the Senate, Charles Schumer of New York and Mark Udall of Colorado introduced credit card reform legislation authored last year by U.S. Rep. Carolyn Maloney of New York.
Maloney plans to reintroduce her “Credit Cardholders Bill of Rights” in the House of Representatives, which approved it last year.
“It is time that we give the power back to the consumer,” Schumer said. The bill will help holders “by outlawing predatory practices and banning unannounced, unfair and deceptive fees and rate increases.”
The Fed’s rules take effect on July 1, 2010. They prohibit raising the annual percentage rate (APR) on existing balances except under certain circumstances, and give consumers 45 days notice before a rate increase and 21 days to pay.
Among other changes, Fed rules will ban a practice known as universal default, in which card terms are changed based on how the holder performs on other bills, such as utilities or gym memberships.
The Fed also approved a disclosure plan that was drafted after extensive focus group tests that even covered the size of type on credit card statements.
The rules include new format requirements for easy-to-read tables of key account terms, such as fees, variable rates and grace periods on purchases. Issuers must also disclose the negative impact of making only minimum required payments.
Maloney, who chairs the House Financial Services Subcommittee on financial institutions and consumer credit, said she was unhappy with the July 2010 implementation date and wanted Congress to act sooner.
She is seeking to have the rules go into effect 90 days after enacted instead of a full year as the bill previously stated.
In 2007, Americans used an estimated 694.4 million credit cards with Visa V.N, MasterCard MA.N, American Express AXP.N and Discover DFS.N logos, according to industry data. Citigroup C.N, Bank of America BAC.N and JPMorgan Chase JPM.N had about 70 percent of the credit card market in 2007.
The credit card industry has argued that the Fed’s new restrictions will significantly lower its profits, and will result in higher rates and less credit availability for consumers. (Reporting by John Poirier; Editing by Brian Moss)
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