Professional Cards: Watch out for this CARD Act loophole!

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We support reforms to the financial marketplace that protect consumers from unscrupulous banks and lenders.

By Consumers Union on Wednesday, September 1st, 2010

The CARD Act contains lots of very important protections for consumers who use credit cards. But to the dismay of business owners, the new law does not provide the same protections for business credit cards.

So what have the credit card companies been doing? They’ve been flooding the mailboxes of regular non-business consumers, offering them “professional cards”! Yep, all you teachers and nurses and newspaper reporters out there, you may have actually wondered why you received an offer from Chase asking you to sign up for their Ink Card which is geared for small business owners. Well the answer is that the bank is trying to avoid giving you the protections that you deserve!

The Wall Street Journal reported that in the first quarter of this year 47 million professional card offers were sent out, which is a 256% increase since the same time last year. WHAT?!

And to make matters worse, Chase Bank has made it even easier for a non-business consumer to sign away their rights, just by checking a simple box. From the same WSJ article:

In January, mailings for the card asked prospective cardholders to provide the name of their company, the nature of the business, its address and its federal employer identification number. In the July mailing cardholders merely had to check a box that said “Yes, I am a business owner” or “Yes, I am a business professional with business expenses.”

“We are always looking for ways to simplify our application,” says Ms. Rossi, the Chase spokeswoman. “All applicants are required to confirm they are a small-business owner or someone who is authorized to charge expenses to the business.”

Senator Chuck Schumer sent a letter to the Fed today, demanding they require banks to verify that a consumer is a business owner by providing a fed tax ID. There’s a lot of work to do to make sure that bank’s don’t take advantage of this already large loophole.

In the meantime, we want to hear from you. Have you received any of these solicitations or accidentally signed up for a business card when you don’t own a business? If so, tell us about it here. Also fax, email or mail your professional card solicitations so we can monitor what the banks are really saying. Make sure to black out any personal info and account numbers!

Attention: Finance Team Organizer
Email: money@defendyourdollars.org
Fax: 415-431-0906
Mail: Consumers Union, 1535 Mission Street, San Francisco, CA, 94107.

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