Senator’s provisions target predatory practices and marketing

WASHINGTON – Today, the Senate passed S.414, the Credit Card Accountability and Disclosure Act of 2009, which included two amendments offered by U.S. Senator Herb Kohl. These amendments require the co-signer of a credit card to approve any credit limit increase if the primary credit card holder is under the age of 21, and commissions a study by the Comptroller General regarding products that are marketed along with credit cards.

“Credit card companies have been taking advantage of their customers for years,” Kohl said. “Practices like universal default, raising interest rates for no reason and charging excessive fees have increased credit card profits while financially straining consumers. Clearly the industry will not self-correct, so legislation is necessary.”

The bill includes provisions to protect young people including banning credit card companies from sending unsolicited credit card offers to those under 21. Additionally, the Kohl amendment -- Issuance of Credit Cards to Certain College Students -- requires any increase in credit limit to be approved by the co-signer of the credit card, which includes parents, guardians, and spouses for those under age 21. This amendment was included in the Banking Committee before the bill moved to a full Senate vote.

Senator Kohl also introduced a Credit Card Offers Study Amendment which requires the Comptroller General to conduct a study of products marketed in conjunction with credit cards with specific review of credit insurance products and debt cancellation and debt suspension agreements.

This study will do two things: (1) allow Congress to review the nature and terms of products offered to credit card customers to determine if predatory practices and marketing are prevalent, and to determine if customers understand the products that are offered and the benefits that will be received; and (2) allow Congress to determine if current legislation adequately protects consumers in their relationship with credit card companies or if additional protection for consumers is necessary.

In January, Senator Kohl introduced S. 165, the Student Credit Card Protection Act. Senator Chris Dodd (D-CT), Chairman of the Banking Housing and Urban Affairs Committee, has included some of these provisions in the Credit Card Accountability and Disclosure Act such as requiring a young consumer to provide information on his or her ability to repay and parental approval of a credit limit increase on a card they have co-signed.  

The Credit Card Accountability and Disclosure Act of 2009 was passed by a vote of 90-5.  

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