BILL NUMBER: AB 1300	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Roger Hernández

                        FEBRUARY 22, 2013

   An act to add Section 1748.97 to the Civil Code, relating to
credit cards.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 1300, as introduced, Roger Hernández. Credit cards: oral
disclosures.
   Existing state and federal laws regulate the provision of credit
and the use of credit cards. Existing federal law requires a card
issuer to disclose, in either electronic form or in a prominent
location on the application or solicitation, certain information,
including, but not limited to, the annual percentage rate, penalty
rates, cash advance fees, late payment fees, and over-the-limit fees,
to the extent applicable, on or with an application or solicitation
that is initiated by the card issuer and provided to the consumer in
person. Existing federal law imposes special rules applicable to
credit cards offered to college students. Existing state law requires
a card issuer of a secured credit card, as defined, in every
advertisement or solicitation to prospective cardholders, to
expressly identify the credit instrument offered as a secured credit
card and disclose that credit extended under the secured credit card
is secured. Existing state law also requires an application form or
preapproved written solicitation for an open-end credit card account
to be used for certain purposes that is mailed to a consumer in this
state to contain specified disclosures, including, among other
things, any periodic rate or rates that may be applied to the
account, any membership or participation fee that may be imposed for
availability of a credit card account, and any per transaction fee
that may be imposed on purchases, as specified.
   This bill would require a credit card issuer on or the near the
campus of an institution of higher education or at an event sponsored
by or related to an institution of higher education to orally
disclose to a first-time cardholder between 18 and 26 years of age
certain information, including, but not limited to, the annual
percentage rate, penalty rates, cash advance fee, late payment fee,
and over-the-limit fee, in a specified manner. The bill would also
require such a card issuer to, among other things, orally (1) provide
a cardholder with an example of how long it would take a cardholder
to pay off the average credit card debt if the cardholder only makes
minimum payments and (2) explain how the credit card interest rates
are compounded. The bill would require a cardholder to initial and
sign a written document to be provided by the card issuer indicating
receipt of the oral disclosures, example, and explanations, as
specified.
   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 1748.97 is added to the Civil Code, to read:
   1748.97.  (a) (1) A credit card issuer on the campus of an
institution of higher education, near the campus of an institution of
higher education, or at an event sponsored by or related to an
institution of higher education, shall, at or prior to the time of
the issuance of a credit card, orally disclose to a first-time
cardholder of a credit card between 18 and 26 years of age the
following:
   (A) Annual percentage rate.
   (B) Penalty rates.
   (C) Cash advance fee.
   (D) Late payment fee.
   (E) Over-the-limit fee.
   (F) Any event specified in the credit card agreement, such as, but
not limited to, a late payment or an extension of credit that
exceeds the credit limit, that would trigger an increase in the
cardholder's annual percentage rate.
   (2) In addition to the disclosures specified in paragraph (1), the
card issuer shall also orally (A) provide a cardholder with an
example of how long it would take the cardholder to pay off the
average credit card debt if the cardholder only makes the minimum
payments, (B) explain how the credit card interest rates are
compounded, and (C) explain the adverse effect a late credit card
payment may have on a cardholder.
   (b) After the card issuer provides the oral disclosures, example,
and explanations required by subdivision (a) and at or prior to the
time of the issuance of a credit card, the card issuer shall provide
a cardholder with a written document containing each oral disclosure,
example, and explanation and the cardholder shall initial each
disclosure, example, and explanation received by the card issuer.
   (c) At or prior to the time of the issuance of a credit card, a
cardholder shall sign the written document described in subdivision
(b) stating that he or she was provided with the oral disclosures,
example, and explanations required by subdivision (a).
   (d) In providing the disclosures described in subdivision (a), the
credit card issuer shall explain the terms in easy-to-understand,
nontechnical terms subject to the description of those terms
contained in Section 226.5a of Title 12 of the Code of Federal
Regulations.
   (e) The provisions of this section are severable. If any provision
of this section or its application is held invalid, that invalidity
shall not affect other provisions or applications that can be given
effect without the invalid provision or application.