Be it enacted by the Senate and House of Representatives
in General Court assembled, and by the authority of the same,
SECTION 1. Chapter 140 of the General Laws is hereby amended by striking out section 114B, as most recently amended by section 2 of chapter 332 of the acts of 1982, and inserting in place thereof the following section:-
Section 114B. Notwithstanding the provisions of section one hundred and one hundred and fourteen A, a creditor may charge a daily, monthly or other periodic rate of finance charge on loans made pursuant to any open-end credit plan as defined by section one of chapter one hundred and forty D, equivalent to but not in excess of eighteen per cent determined in accordance with paragraph (2) of subsection (a) of section five of chapter one hundred and forty D; provided, however, that if the index rate for any calendar quarter, as hereinafter determined, exceeds eighteen per cent, the creditor may, during such calendar quarter, charge such daily, monthly or other periodic rate or rates as may be established by such creditor. The commissioner of banks shall determine as of the computation dates of December first, March first, June first and September first of each year, and not later than one business day after each such computation date, the index rate for the succeeding calendar quarter beginning January first, April first, July first and October first, respectively. The index rate determined on each computation date for the following calendar quarter shall be the number determined by doubling the average of the rates established and announced, as the auction average on a discount basis, for United States Treasury bills with maturities of ninety-one days at the auctions held during the three calendar months preceding the computation date. At the option of the creditor, the periodic rate that a creditor charges on an account may be adjusted to reflect a change in the index rate either on the first day of the respective calendar quarter or on the first day of the first billing cycle of the account immediately following such date; provided, however, that any limitation on finance charges imposed under this section shall remain in effect for three months from the date so chosen. A finance charge not in excess of fifty cents for a monthly or longer billing cycle or the pro rata part of fifty cents for a billing cycle shorter than monthly may be assessed if the finance charge otherwise assessable is less than fifty cents. For the purpose of this section, a billing cycle shall be considered to be monthly if the billing dates are on the same day of each month or do not vary by more than four days therefrom. No creditor shall impose a delinquency charge, late charge, or similar charge on loans made pursuant to such an open end credit plan.
In addition to disclosures of such rate required by chapter one hundred and forty D, the commissioner of banks shall have the authority to promulgate regulations requiring additional disclosures by creditors concerning periodic rate, other costs of credit, and any other additional features of the agreement.
A finance charge imposed on a transaction subject to this section but not subject to the provisions of the first paragraph of section twenty of chapter one hundred and forty D shall be computed on (i) the previous balance after deducting all payments on account received by the creditor during the cycle and all credits to the account during the cycle applicable to any transaction reflected in the previous balance; or (ii) the average daily balance determined by adding the daily balances on the account for each day in the billing cycle and dividing the total by the number of days in the billing cycle; or (iii) daily balances.
The provisions of this section shall not apply to any extension of credit made pursuant to the provisions of chapter two hundred and fifty-five D.
SECTION 2. Section 20 of chapter 140D of the General Laws, as most recently amended by chapter 733 of the acts of 1981, is hereby further amended by striking out said section and inserting in place thereof the following section:-
Section 20. If a finance charge is imposed under an open-end credit plan on balances resulting from the sale of goods or services at retail made in reliance on a credit card, the finance charge applicable to said balances for any cycle shall be computed on (i) the previous balance after deducting all payments on account received by the creditor during the cycle and all credits to the account during the cycle applicable to any sale reflected in the previous balance; or (ii) the average daily balance determined by adding the daily balances on the account for each day in the billing cycle and dividing the total by the number of days in the billing cycle; or (iii) daily balances; provided, however, that no finance charge may be computed on any new sale reflected for the first time in the account during the billing cycle if there was no balance outstanding in the account at the beginning of the cycle, or if such balance is solely attributable to a finance charge assessed with respect to the preceding billing cycle, or if the sum of all payments received by the creditor during the cycle and all credits to the account applicable to any balance outstanding at the beginning of the cycle is equal to or exceeds the amount of such balance outstanding; and provided further, that the finance charge applicable to said balances for any cycle may not be computed on any new sale reflected for the first time in the account during the cycle on any extension of credit made pursuant to chapter two hundred and fifty-five D.
SECTION 3. The General Laws are hereby amended by inserting after chapter 140D the following chapter:- `tuc CHAPTER 140E. `tuc CONSUMER ACCOUNT DISCLOSURE.
Section 1. For the purposes of this chapter the following words shall, unless the context indicates otherwise, have the following meanings:-
"Account", a demand deposit, negotiable withdrawal order account, savings deposit, share account or other consumer asset account, other than an occasional or incidental credit balance in an open end credit plan as defined in chapter one hundred and forty D, established primarily for personal, family or household purposes, but such term does not include an account held by a financial institution pursuant to a bona fide trust agreement.
"Commissioner", the commissioner of banks.
"Consumer", a natural person.
"Financial Institution", a state or national bank, a state or federal savings and loan association, a state or federal savings bank, a co-operative bank, a state or federal credit union, or any person doing business similar to any business referred to in section one of chapter one hundred and sixty-seven.
"Term deposit account", an account evidenced by a passbook, certificate or statement for which deposits must be maintained for a specified period.
Section 2. (a) Before an account is opened, a financial institution shall disclose information on accounts to a consumer in a written statement which the consumer may retain. The commissioner shall promulgate rules and regulations prescribing the form, content and distribution of such information and the information to be disclosed which shall include but not be limited to the following: disclosure of the annual rate of simple interest; the effective annual yield; the formula used in calculating interest; the frequency of compounding and crediting of interest; date on which a deposit begins to earn interest; any delay in crediting a deposited instrument; grace periods for deposits and withdrawals; the minimum balance required to earn interest; the method of determining the balance on which interest is paid; the minimum length of time funds must remain on deposit to earn interest; any fees levied on inactive accounts; any charges, penalties or other conditions imposed upon withdrawals; any penalties for the closing of an account before a specific date; any other fees, charges or penalties; and the method by which a consumer shall be notified of any changes to any of these items.
(b) In addition to the disclosures required under paragraph (a) the commissioner shall promulgate such rules and regulations prescribing information to be disclosed by a financial institution on any account which is a term deposit account, which regulations shall include but not be limited to the following:
(1) the minimum and maximum length of the term; (2) a description of the penalties, if any, for withdrawal prior to the minimum maturity date; (3) the method and timing of any notice of the approaching maturity date of such account; (4) an explanation of the action that the financial institution will take on such account if no instructions are received from the account holder by the maturity date of any established period thereafter; (5) for any such account which merchandise is given instead of interest a financial institution shall disclose the amount of interest that would be earned on such account and the usual selling price of the merchandise at principal outlets in the financial institution's area which do not do business on a discount basis.
(c) Any regulation, or any amendment or repeal of any such regulation shall, after compliance with all applicable provisions of chapter thirty A of the General Laws, be filed with the clerk of the house of representatives. Said clerk shall transmit a copy of such regulation, amendment or repeal to the joint committee on banks and banking. Notwithstanding any law to the contrary, such regulation, amendment or repeal shall not take effect until ninety days after such filing with said clerk.
Section 3. A violation of this chapter shall also constitute a violation of chapter ninety-three A.
Section 4. This chapter shall be known and may be cited as the Truth-in-Savings Law.
SECTION 4. The provisions of section three of this act shall apply to accounts opened on or after July first, nineteen hundred and eighty-five.
SECTION 5. This act shall become inoperative two years after its effective date.