It seems like almost every other word we hear from our political leaders is about the need to support small businesses to get the economy back on track. As small business owners, there’s one simple thing that could be done that would provide almost immediate help.
Small business owners have big troubles with big banks and credit cards and the new Consumer Financial Protection Bureau (CFPB) should take a look.
First, banks don’t like smaller accounts. Many of us face hassles even receiving business lines of credit. Often, we rely on our personal cards to fund our small businesses.
But when we face fraud problems or billing disputes related to those business uses, the banks say that the consumer protection laws don’t always apply. Even consumer groups say it’s a gray area. And where we have rights, we have to fight with the banks which, as you might imagine, does not often lead to a result in our favor.
For those of us who do qualify for business cards, it is clear that the cards have no consumer protections under the law. Banks can raise our interest rate at any time for any reason including no reason at all. Banks can lower our credit limit at any time, even to amounts below our current balance. There are no restrictions on penalty fees. When we are victims of fraud or billing errors we have no right under the Truth In Lending Law.
Consumers gained important new protections in the Credit CARD Act of 2009. In response, some credit card companies have been accused of marketing business cards to consumers and then denying those consumers their rights because they have business cards, not consumer cards.
Groups such as the National Small Business Association have joined consumer groups in calling for change. While some issuers have voluntarily extended some consumer protections to business cards, small businesses deserve better. We deserve a level playing field. We are counting on the new Consumer Financial Protection Bureau (CFPB) to help.