Business Credit Cards Put Millions at Risk

The Credit CARD Act of 2009, signed into law two years ago, made consumer credit cards safer and more transparent. But there's a huge loophole that very few American consumers are aware of: The CARD Act and its rules do not apply to cards labeled for business or commercial use, placing millions of individuals and small business owners at risk.

Practices the Federal Reserve deemed “unfair” or “deceptive,” such as hair trigger interest rates and unpredictable rate increases, remain widespread in business credit cards that are regularly offered to American households, according to a report by the Pew Health Group’s Safe Credit Cards Project. 

As noted in the research, 40 years ago business credit cards were excluded from federal consumer protections because policymakers concluded that business owners were in the position to analyze risk.

However, Pew found that between January 2006 and December 2010, American households received over 2.6 billion offers in the mail for these financial products. Whether the respondent to these solicitations is a large company, an owner of a small company, an employee or an individual, they are personally liable for all charges and are not protected by the key provisions in the Credit CARD Act.

“Every month more than 10 million business credit card offers are mailed to households at all income levels. The sheer number of offers that are sent to homes all across the nation represents a risk to millions of American families,” said Nick Bourke, director of Pew’s Safe Credit Cards Project.

“To better protect individuals, families and small business owners we urge that the safeguards found in the Credit CARD Act be extended to any card on which the cardholder is personally liable,” Bourke said.

A Pew study released earlier this week found that the CARD Act was doing a good job of protecting consumers from some of the more objectionable practices of the past.