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Small businesses ignored by the Credit Card Accountability Responsibility and Disclosure Act
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The Credit Card Accountability Responsibility and Disclosure Act was recently signed by President Obama to drastically change the way credit card companies operate. There were several key elements of the act that is designed to protect consumers from deceptive or predatory practices of credit card issuers.
Key elements of the act banned unfair rate increases, unfair fee traps, requires plain sight/plain language disclosures, and more accountability from issuers as well as regulators of the credit card industry.
While these efforts are certainly admirable, they ignore a significant portion of credit card users - small businesses. A lot of small or micro businesses use credit cards to help fund their small business. In fact I recently wrote how credit card use is growing among small businesses. These owners may have been helped immensely by this reform, but because the new law amends the Truth in Lending Act, the new reforms only govern consumer loans, not corporate cards.
Senator Mary Landrieu, D-La., and Olympia Snowe, R-Maine, both of the Senate Committee on Small Businesses, proposed an amendment that would extend these reforms to any business with 50 or fewer employees. This amendment was defeated in the Senate.
Quite a few business owners use personal credit to help run their business, so there is a chance that they will be covered. However, those who use corporate cards must remain diligent in remaining aware of their credit card terms and not letting the use of credit cards get out of control.
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