Senators Seeking Crackdown on Business Credit Cards - Other News

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Credit Card Applications » News » Other » Senators Seeking Crackdown on Business Credit Cards

Senators Seeking Crackdown on Business Credit Cards

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Senators Seeking Crackdown on Business Credit Cards

There is a dividing line on the protection that a consumer credit card holder receives over that of a business card holder. While consumers are protected and have rights under the CARD Act of 2009, these same rules of protection do not apply to business credit cards. This is a situation that many business card holders are not aware of, so four U.S. Senators are calling on the Federal Reserve to take action against card issuers who may be attempting to circumvent the new protections by offering “business cards” to unsuspecting consumers, many of whom do not have businesses.

On June 14th, a letter was sent to the Federal Reserve Chairman Ben Bernanke by four Senators: Sen. Charles Schumer (D-NY), Jack Reed (D-RI), Bill Nelson (D-FL) and Robert Menendez (D-NJ).

The Letter

In the letter, the Senators wrote, “We are very concerned issuers are marketing these products to ordinary consumers who may not realize they do not offer the same protections as personal cards.” According to the Wall Street Journal, 10 million consumers receive business card offers each month, but are not fully aware that this is what they are receiving. The Journal reports that this figure comes from a study, the Safe Credit Cards project at Pew Charitable Trusts, a Washington-based consumer-advocacy group.

“We respectfully request that the Federal Reserve take immediate steps to protect consumers by requiring business credit card issuers, in connection with any solicitation, to (a) clearly identify in any solicitation materials that the card being offered is a business card, (b) clearly disclose that the card may not carry all the same protections as ordinary consumer cards, and (c) require applicants to provide a business tax identification numberon the application,” the Senators wrote.

Business Card Protection

While the CARD Act 0f 2009 does not officially protect business card holders, many credit card issuers are doing the right thing by applying some of the same consumer protections to business card holders. For example, under the Act inactivity fees are restricted and sudden interest rate increases are not permitted.

The Senators’ letter commended Bank of America and Capital One for voluntarily extending some of the customer protections to their business card holders but overall they were concerned that marketers are not giving consumers enough information about the cards being offered. Many of the business card solicitations are going to seniors.

All credit cards terms, fees and rates mentioned in this article/post are actual on the posting date. See the current products’ Terms & Conditions on the issuing banks' websites.
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