How Banks Avoid Protections of 2009 Credit Card Act


If you’ve received an offer for a credit card in recent months called a “professional card” and you are not a small business owner, you are not alone. Banks are flooding the market with solicitations for these pieces of plastic that aren’t covered by the protections afforded in the Credit Card Accountability and Responsibility and Disclosure Act of 2009.

Banks such as Capital One, J.P. Morgan Chase and Citibank have mailed offers for these hybrid cards that until recently used to be dedicated to small business owners or corporate executives. In the first quarter of 2010, issuers mailed out 47 million professional offers, a 256% increase from the same period last year, according to research firm Synovate.

The Wall Street Journal reported that with a few small tweaks in the application, the offering banks no longer require specific information that would identify the consumer as the owner of a business. No one is screaming fraud, however, since the banks are not obligated to disclose that the cards are not covered by the terms of the Card Act of 2009. Some of the consumer protection items that do not apply to these kinds of cards are, controversial billing practices such as hair-trigger interest rate increases, shortened payment cycles and inactivity fees. 

Professional Cards Are Not Covered by Consumer Protections of Card Act of 2009

Prior to the legislation taking effect, banks’ applications for professional cards 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 last sixty days, applications have been amended to ask for less specific data and have opened up eligibility to people who don’t own a business. The Journal reported that 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.”

Here are five things that separate the professional cards from those consumer cards covered by the Card Act of 2009.

Payments in excess of the minimum can be applied to balances with the lowest interest rates.

Terms of the agreement between the consumer and the bank are changeable without notice.

Payments can be demanded with fewer than 21 days after the latest invoice is sent to the card holder.

Large fees can be assessed if a card holder exceeds the credit limit.

If you have any doubt about whether an application for credit is covered by the Card Act, call the company that sent you the offer and ask for specifics. Record the date, time and the name of the person to whom you spoke to help you untangle a mess if you were given incorrect information.