Minnesota Session Laws - 1987, Regular Session

  

                         Laws of Minnesota 1987 

                        CHAPTER 256-H.F.No. 822 
           An act relating to commerce; requiring that credit 
          card applications contain specific disclosures 
          respecting conditions and costs; prescribing 
          penalties; providing remedies; proposing coding for 
          new law in Minnesota Statutes, chapter 325G. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  [325G.40] [CITATION.] 
    Sections 1 to 8 may be cited as the "credit card disclosure 
act." 
    Sec. 2.  [325G.41] [DEFINITIONS AND COMPUTATIONS.] 
    Subdivision 1.  [GENERALLY.] Except as otherwise provided, 
the terms used in sections 1 to 8 have the meanings prescribed 
in Code of Federal Regulations, title 12, part 226.  Except as 
otherwise provided, the computations required under sections 1 
to 8 shall be made as provided in Code of Federal Regulations, 
title 12, part 226. 
    Subd. 2.  [CREDIT CARD APPLICATION.] "Credit card 
application" means any written form, document, or material 
distributed by or on behalf of a creditor and designed to be 
used by a consumer to request or accept the issuance of a credit 
card. 
    Subd. 3.  [CREDITOR.] "Creditor" includes any credit card 
issuer that extends either open-end credit or credit that is not 
subject to a finance charge and is not payable in installments. 
    Sec. 3.  [325G.42] [CREDIT CARD DISCLOSURES.] 
    Subdivision 1.  [REQUIRED DISCLOSURES.] A credit card 
application distributed in this state must disclose the 
following terms of the credit card plan, if applicable: 
    (1) Any periodic rate or rates that may be applied to the 
account, expressed as an annual percentage rate or rates.  If 
the account is subject to a variable rate, the creditor may 
disclose the rate as of a specific date and indicate that the 
rate may vary, or may identify the index and any amount or 
percentage added to, or subtracted from, that index and used to 
determine the rate.  For purposes of this section, the amount or 
percentage must be referred to as the "spread."  If charges 
incurred by use of the credit card are due and payable upon 
receipt of a periodic statement of charges, then that fact must 
be disclosed. 
    (2) Any membership, participation, or similar fee that may 
be imposed as a condition of the issuance or renewal of a credit 
card, expressed as an annual amount. 
    (3) Any minimum, fixed, transaction, activity, or similar 
charge. 
    (4) Any other fees that may be charged to the account, 
including late payment fees and charges for exceeding credit 
limits. 
    (5) The date or occasion upon which the finance charge, if 
any, begins to accrue on a transaction. 
    Subd. 2.  [FORM OF DISCLOSURES.] The disclosures required 
under this section shall be written in plain language, as 
defined in section 325G.31; shall be in boldface type of a 
minimum size of ten points; shall be clear and conspicuous; and 
shall be prominently set apart from the remaining portions of 
the credit card application or other written material, by the 
use of margins, enclosures, underlining, contrasting colors, or 
similar methods. 
    Subd. 3.  [OPTIONAL DISCLOSURE CHART.] A creditor need not 
present the disclosures required by subdivision 1 in any 
specific form other than as provided in subdivision 2.  However, 
the disclosures are conclusively presumed to satisfy the 
requirements of subdivision 1 if the disclosures satisfy the 
requirements of subdivision 2 and are presented in a chart, 
substantially similar to the following description: 
    (1) The chart shall consist of contiguous boxes, and each 
required disclosure shall appear exclusively within one of the 
boxes. 
    (2) The first box shall contain the wording "ANNUAL 
PERCENTAGE RATE" if the creditor charges a fixed rate, or 
"VARIABLE RATE INDEX AND SPREAD," if appropriate, underneath 
which the creditor's rate will appear.  If full payment is due 
upon receipt of a periodic statement of charges, then the first 
box shall state "Full payment due upon receipt of billing 
statement." 
    (3) The second box shall contain the wording "OTHER FEES"  
and shall disclose all other fees, including late payment 
penalties and any charges for exceeding the credit limit. 
    (4) The third box shall contain the wording "ANNUAL FEE," 
underneath which the appropriate information shall be disclosed. 
    (5) The fourth box shall contain the wording "TRANSACTION 
FEE," underneath which the appropriate information shall be 
disclosed. 
    (6) The fifth box shall contain the wording "FREE PERIOD" 
or "GRACE PERIOD," underneath which the appropriate information 
shall be disclosed.  For example, "30 days," or "yes, if full 
payment is received by next billing date," or "yes, if full new 
balance is paid by due date." 
    Subd. 4.  [ADDITIONAL DISCLOSURES PERMITTED.] Nothing in 
this section prohibits a creditor from disclosing additional 
terms, conditions, or information, whether or not relating to 
the disclosures required under this section, in conjunction with 
the disclosures required by this section. 
    Subd. 5.  [EXCEPTION.] This section does not apply to any 
advertisement, catalogue, or other written document or material 
which does not contain a credit card application. 
    Sec. 4.  [325G.43] [PENALTIES.] 
    A person violating section 3 is subject to the penalties 
provided in section 8.31. 
    Sec. 5.  [325G.44] [DAMAGES.] 
    A person injured by a violation of section 3 may recover 
actual damages in an action other than a class action, together 
with costs and disbursements, including a reasonable attorney's 
fee, and receive other equitable relief as determined by the 
court. 
    Sec. 6.  [325G.45] [FEDERAL LAW.] 
    If a creditor becomes required by federal law to make 
disclosure of the terms required in section 3 in connection with 
the distribution of a credit card application, then the creditor 
is considered to have complied with the requirements of section 
3 if the creditor complies with the federal disclosure 
requirement. 
    Sec. 7.  [325G.46] [ALTERNATIVE COMPLIANCE.] 
    In lieu of complying with section 3, subdivision 2, a 
creditor, in connection with the distribution of a credit card 
application, may disclose the specific terms of section 3 in 
compliance with Code of Federal Regulations, title 12, part 
226.5. 
    Sec. 8.  [325G.47] [NOTIFICATION OF ANNUAL FEE.] 
    The customer must be notified of the amount of the annual 
fee, if any, and the date the fee is payable at least 30 days 
before the account is charged for the fee, and during that 
30-day period the customer may cancel the open-end credit plan 
without penalty other than payment of any outstanding balance. 
    Sec. 9.  [EFFECTIVE DATE.] 
    Sections 1 to 8 are effective January 1, 1988. 
    Approved May 27, 1987