Last year, we blogged about how credit card issuers were trying to get around the new protections in the CreditCARD Act by sending out millions of solicitations for “professional” credit cards. Business credit cards are not covered by the protections in the CreditCARD Act, unfortunately…so credit card companies saw an opportunity to evade the law by sending out “professional” cards geared for small business owners to consumers – even if they don’t own a business! – in the hopes that they would sign away their rights.
Since we talked about this trap, we’ve heard from consumers who got stuck. For example,
Anthony of Santa Monica, CA told us that he “opened a Citi Professional card a few years ago. After the CARD act took effect, I was a couple days late on my payment. They raised the rate on existing balances from 9% to 30%. I called and spoke with managers, supervisors, no one cared and no one would adjust the rate. One manager told me the card was “not subject to consumer credit law” because it was a “business card.” I asked what business name the credit line was in. Of course he said there was none. How can it be a “business account” if there’s no business that’s a party to the loan?? It’s really ridiculous.”
Now, a Pew study just released this week has confirmed that this practice is widespread. The study found that American households receive more than 10 million offers each month for business credit cards, and that the majority of these cards have potentially harmful terms that would be prohibited on credit cards that are labeled for consumer use.
So if you receive a solicitation in the mail for a “business” or “professional” credit card, beware! When you sign up to use one, you are opting out of the strong protections that apply to consumer credit cards under the CreditCARD Act. To learn more about your rights under the CreditCARD Act, click here.
Have you accidentally signed up for a business or “professional” credit card even though you don’t own a business? Submit your comments below.