Alert June 02, 2009

President Obama Signs Federal Credit Card Legislation

On May 22, 2009, President Obama signed into law the Credit Card Accountability Responsibility and Disclosure Act of 2009 (the “Act”).  The Act significantly changes requirements applicable to credit card and gift card issuers.  Included among the Act’s many new requirements are a 45-day advance notice requirement for an increase in the annual percentage rate (“APR”) or for other changes in terms to a credit card agreement that are “significant,” as determined by the FRB; a requirement to review accounts that have been subject to an APR increase every 6 months to determine whether the APR should be decreased; a restriction on the ability of creditors to increase an APR, fee or finance charge during the first year an account is open; and a prohibition on double-cycle billing.  The Act also restricts the charging of certain fees on general-use prepaid card, gift certificate and store gift card accounts.  The majority of the Act’s requirements go into effect in February 2010.  Some of the Act’s requirements, however, including the 45-day advance notice requirement, go into effect on August 20, 2009, while others go into effect in August 2010.  For a detailed discussion of the Act prepared by our Consumer Financial Services Practice area please see the June 2, 2009 issue of our sister publication, the Consumer Financial Services Alert.