Bill Text: CA SB1338 | 2013-2014 | Regular Session | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Credit cards: disclosures.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2014-04-03 - Re-referred to Com. on JUD. [SB1338 Detail]

Download: California-2013-SB1338-Introduced.html

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BILL NUMBER: SB 1338	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Wyland

                        FEBRUARY 21, 2014

   An act to amend Section 1748.13 of the Civil Code, relating to
credit cards.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1338, as introduced, Wyland. Credit cards: disclosures.
   Existing law, the Areias Credit Card Full Disclosure Act of 1986,
requires a credit card issuer, with each billing statement provided
to a cardholder in this state, to provide certain information on the
front of the first page of the billing statement. Existing law
defines various terms for purposes of carrying out that requirement.
   This bill would make nonsubstantive changes to that definition
provision.
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 1748.13 of the Civil Code is amended to read:
   1748.13.  (a) A credit card issuer shall, with each billing
statement provided to a cardholder in this state, provide the
following on the front of the first page of the billing statement in
type no smaller than that required for any other required disclosure,
but in no case in less than 8-point capitalized type:
   (1) A written statement in the following form: "Minimum Payment
Warning: Making only the minimum payment will increase the interest
you pay and the time it takes to repay your balance."
   (2) Either of the following:
   (A) A written statement in the form of and containing the
information described in clause (i) or (ii), as applicable, as
follows:
   (i) A written three-line statement, as follows:

"A one thousand dollar ($1,000) balance will take 17 years and three
months to pay off at a total cost of two thousand five hundred ninety
dollars and thirty-five cents ($2,590.35).
A two thousand five hundred dollar ($2,500) balance will take 30
years and three months to pay off at a total cost of seven thousand
seven hundred thirty-three dollars and forty-nine cents ($7,733.49).
A five thousand dollar ($5,000) balance will take 40 years and two
months to pay off at a total cost of sixteen thousand three hundred
five dollars and thirty-four cents ($16,305.34).
This information is based on an annual percentage rate of 17 percent
and a minimum payment of 2 percent or ten dollars ($10), whichever
is greater."

   In the alternative, a credit card issuer may provide this
information for the three specified amounts at the annual percentage
rate and required minimum payment which are applicable to the
cardholder's account. The statement provided shall be immediately
preceded by the statement required by paragraph (1).
   (ii) Instead of the information required by clause (i), retail
credit card issuers shall provide a written three-line statement to
read, as follows:

"A two hundred fifty dollar ($250) balance will take two years and
eight months to pay off a total cost of three hundred twenty-five
dollars and twenty-four cents ($325.24).
A five hundred dollar ($500) balance will take four years and five
months to pay off at a total cost of seven hundred nine dollars and
ninety cents ($709.90).
A seven hundred fifty dollar ($750) balance will take five years and
five months to pay off at a total cost of one thousand ninety-four
dollars and forty-nine cents ($1,094.49).
This information is based on an annual percentage rate of 21 percent
and a minimum payment of 5 percent or ten dollars ($10), whichever
is greater."

   In the alternative, a retail credit card issuer may provide this
information for the three specified amounts at the annual percentage
rate and required minimum payment which are applicable to the
cardholder's account. The statement provided shall be immediately
preceded by the statement required by paragraph (1). A retail credit
card issuer is not required to provide this statement if the
cardholder has a balance of less than five hundred dollars ($500).
   (B) A written statement providing individualized information
indicating an estimate of the number of years and months and the
approximate total cost to pay off the entire balance due on an
open-end credit card account if the cardholder were to pay only the
minimum amount due on the open-ended account based upon the terms of
the credit agreement. For purposes of this subparagraph only, if the
account is subject to a variable rate, the creditor may make
disclosures based on the rate for the entire balance as of the date
of the disclosure and indicate that the rate may vary. In addition,
the cardholder shall be provided with referrals or, in the
alternative, with the "800" telephone number of the National
Foundation for Credit Counseling through which the cardholder can be
referred, to credit counseling services in, or closest to, the
cardholder's county of residence. The credit counseling service shall
be in good standing with the National Foundation for Credit
Counseling or accredited by the Council on Accreditation for Children
and Family Services. The creditor is required to provide, or
continue to provide, the information required by this paragraph only
if the cardholder has not paid more than the minimum payment for six
consecutive months, after July 1, 2002.
   (3) (A) A written statement in the following form: "For an
estimate of the time it would take to repay your balance, making only
minimum payments, and the total amount of those payments, call this
toll-free telephone number: (Insert toll-free telephone number)."
This statement shall be provided immediately following the statement
required by subparagraph (A) of paragraph (2). A credit card issuer
is not required to provide this statement if the disclosure required
by subparagraph (B) of paragraph (2) has been provided.
   (B) The toll-free telephone number shall be available between the
hours of 8 a.m. and 9 p.m., Pacific standard time, seven days a week,
and shall provide consumers with the opportunity to speak with a
person, rather than a recording, from whom the information described
in subparagraph (A) may be obtained.
   (C) The Department of Financial Institutions shall establish a
detailed table illustrating the approximate number of months that it
would take and the approximate total cost to repay an outstanding
balance if the consumer pays only the required minimum monthly
payments and if no other additional charges or fees are incurred on
the account, such as additional extension of credit, voluntary credit
insurance, late fees, or dishonored check fees by assuming all of
the following:
   (i) A significant number of different annual percentage rates.
   (ii) A significant number of different account balances, with the
difference between sequential examples of balances being no greater
than one hundred dollars ($100).
   (iii) A significant number of different minimum payment amounts.
   (iv) That only minimum monthly payments are made and no additional
charges or fees are incurred on the account, such as additional
extensions of credit, voluntary credit insurance, late fees, or
dishonored check fees.
   (D) A creditor that receives a request for information described
in subparagraph (A) from a cardholder through the toll-free telephone
number disclosed under subparagraph (A), or who is required to
provide the information required by subparagraph (B) of paragraph
(2), may satisfy its obligation to disclose an estimate of the time
it would take and the approximate total cost to repay the cardholder'
s balance by disclosing only the information set forth in the table
described in subparagraph (C). Including the full chart along with a
billing statement does not satisfy the obligation under this section.

   (b) For  the  purposes of this section  , the
following definitions apply  :
   (1) "Credit card" has the same meaning as in paragraph (2) of
subdivision (a) of Section 1748.12.
   (2) "Open-end credit card account" means an account in which
consumer credit is granted by a creditor under a plan in which the
creditor reasonably contemplates repeated transactions, the creditor
may impose a finance charge from time to time on an unpaid balance,
and the amount of credit that may be extended to the consumer during
the term of the plan is generally made available to the extent that
any outstanding balance is repaid and up to any limit set by the
creditor.
   (3) "Retail credit card" means a credit card is issued by or on
behalf of a retailer, or a private label credit card that is limited
to customers of a specific retailer.
   (c) (1) This section shall not apply in any billing cycle in which
the account agreement requires a minimum payment of at least 10
percent of the outstanding balance.
   (2) This section shall not apply in any billing cycle in which
finance charges are not imposed.