Schumer asks Fed to curb pitching of business credit cards
U.S. Senator Charles Schumer, a Democrat from New York, is asking the Federal Reserve to scrutinize credit-card issuers pitching business credit cards to people who don't own businesses or are retired.
Business credit cards are exempt from the provisions of the newly-enacted credit-card regulation. Issuers increased mailings of corporate-card offers by 256 percent in the first quarter of 2010 compared with a year earlier, Schumer's statement said.
"Credit card companies seem to be purposely hawking corporate cards to consumers who don't own a business and may even be retired. This is more than deceptive marketing; it is a dirty trick meant to get around the new credit card law. We need to put an immediate stop to this scheme, but in the meantime, consumers should be sure to read the fine print of the offers they are getting in the mail. This is the latest, most brazen attempt yet by the credit card industry to get around the law," Schumer said in a statement.
Schumer sent a letter to Fed Chairman Ben Bernanke requesting that the Federal Reserve 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 was signed by President Barack Obama in May 2009. The act 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.