I missed this one yesterday. I shouldn’t have. Connie Prater over at CreditCards.com has a story about the impact that the new Fed rules, which are slated to take effect in July 2010, will have on business and corporate cards. The new rules, as the headline makes clear, will not cover business and corporate cards. From the story:”They apply to consumer credit cards, accounts for personal use,” Benjamin Olson, an attorney for the Fed, said Tuesday during a teleconference on unfair credit card practices jointly sponsored by the Fed, NCUA and OTS. Olson was one of three representatives from the agencies who spent nearly two hours answering questions from credit unions and other lending institutions about what the new rules do and don’t cover. The briefing was designed to get card issuers that haven’t already done so to begin making plans to implement the rules.According to The Nilson Report, a monthly payment industry newsletter, commercial cards include corporate (or travel and entertainment) cards, small business debit and credit cards, fleet cards, purchasing cards and prepaid commercial cards. Many small business credit cards have been canceled or their limits drastically cut back in recent months as issuers move to reduce their risk. Olson warned those on the conference call that although the new rules apply to consumer credit cards, the standards of unfairness outlined in the FTC Act “still apply in this situation” to commercial cards. For those of you with business cards, you’re just ass out (as you’ve always been). Business cards have never offered all of the protections that consumer cards offer. By not covering business cards, the Fed is just preserving the status quo.There is one thing that I would like to point out, though. Some business card accounts are starting to show up on personal credit reports. One of my readers, Scott, posted a note on my blog last night. This is Scott’s message:Just spoke with a supervisor in credit management for Discover.News Flash: This is going to be an industry standard! Yes, that’s what she told me … that corporate/business cards unilaterally will be showing in personal reports shortly because of the economic mess the banks are in.I did get an address to write letters presenting the business owners side of the story for this policy:DiscoverPO Box 3004New Albany, Ohio 43054I informed her that if all businesses that have lines of credit and credit cards were to be reflected on the owners personal reports, there would be no lending in this country. Basically everybody’s scores would tank and show HUGE debt to income ratio’s and therefore the cc companies and banks would have NO business at all.She said that they have been getting many complaints/phone calls and that she totally understood and agreed with my point. Once again, the power of the pen will come into play. I encourage anyone having business cards to re-evaluate their situations and write to this address.So, business cardholders get none of the new protections, but they do get the downside of having all of their business expenses showing up on their personal credit reports, which will very likely translate into lower credit scores. Doesn’t sound like a very good deal.We now know that Discover plans to report all of its business cards to personal credit reports. I’ve also heard from quite a few readers that some of their other business cards (not issued by Discover) have started reporting too. But it’s not widespread enough for me to claim that it’s across the board yet. Indeed, Bank of America, Chase, and Citibank have not implemented this change. Until they do, I’ll chalk up the Discover comment as pertaining only to Discover. The supervisor can’t speak for the rest of the industry at this point.
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