Ohio Businesses Left Out in Credit Card Reform
Ohio businesses will not receive the same benefit as consumers under the new Credit Card Accountability Responsibility and Disclosure Act that will take effect in part this August, with the rest of the provisions kicking in next February (see Help for Ohio Credit Card Holders: Fed Approves Rules to Help Consumers for more details on the changes included in the Act).
The new law actually amends the Truth in Lending Act (TILA) and, because the TILA only applies to consumer loans, traditional corporate credit cards will not receive the various protections provided by the new changes. However, the law should apply to company cards that are guaranteed by the business owner and tied to their personal credit (such as those of sole-proprietors).
What does this mean for Ohio businesses? Unfortunately, traditional orporate credit cards will still be subject to the unscrupulous practices of some credit card companies that have recently caused outrage among consumers and legislators alike. This includes practices such as imposing retroactive rate increases on existing balances (even for consumers in good standing), the notorious "double-cycle billing" and universal default (a rate hike imposed when a consumer is late on a payment for an unrelated account). Two senators did propose an amendment to extend the new protections to businesses with fewer than fifty employees, but the amendment was defeated. Instead, the bill simply directs the Federal Reserve to conduct a study of credit use by small businesses. Ohio business owners should continue to closely monitor their credit use and scrutinize any notices they receive regarding their credit accounts to avoid increased fees, higher interest rates or any other unwelcome change to their accounts.
