Schumer Asks Fed to Curb Pitching of Business Credit Cards Exempt From Law
Senator Charles Schumer, a New York Democrat, asked the Federal Reserve to look more closely at credit-card issuers pitching business cards to consumers, as the cards are exempt from provisions of the credit-card legislation.
“Credit-card companies are purposely hawking corporate cards to consumers who don’t own a business and may even be retired,” said Schumer in a statement today. “It is a dirty trick meant to get around the new credit-card law.”
Issuers increased mailings of corporate-card offers by 256 percent in the first quarter of 2010 compared with a year earlier, the statement said, citing data from Synovate, a London-based market research firm.
Schumer sent a letter to Fed Chairman Ben Bernanke today requesting that the Fed require credit-card companies to verify consumers are business owners by providing federal tax identification numbers before approving corporate card applications.
The Credit Card Accountability Responsibility and Disclosure Act, which was signed by President Barack Obama in May 2009 and took effect in three stages, limits rate increases, requires banks to apply payments to higher-rate balances first and mail bills 21 days before the due date instead of 14 days, among other provisions. The reforms don’t apply to corporate cards, which are intended for use by small business owners.
“Consumers may fall for one of these professional cards thinking it gives them prestige, not realizing that small business credit has little protection against unfair or deceptive practices,” Lauren Saunders, managing attorney of the Washington office of the National Consumer Law Center, said in the statement.