Will Credit Card Protections Be Extended to Small Businesses?

Apr 3rd, 2011 | By Dawn Rivers Baker

Sometimes, Congress winds up doing the right thing for the wrong reasons and that is never as true as it is when lawmakers don’t know what is going on out here in the real world. Last month, Congresswoman Nita Lowey (D-NY) introduced the Small Business Credit Card Act (H.R. 1137). This relatively short bill would make some changes to the changes made in the Truth in Lending Act under the Credit Card Accountability, Responsibility and Disclosure (CARD) Act that was signed into law in 2009.   The Credit CARD Act put a series of consumer protections in place with credit card issues and the Small Business Credit Card Act would extend those consumer protections contained in the Credit CARD Act to apply to small businesses with fewer than 50 employees.

But there’s another interesting facet of this bill. Among other things, Congress “found” for this legislation that small businesses leading the way out of recessions, lacking access to traditional sources of capital, are being pushed into credit card use and often don’t having collateral assets. Interestingly, all of this is generally true of many microbusinesses and has been for quite a long time.  If anything, the only thing in those Congressional findings that might be considered inaccurate is the implication that this state of affairs is new or that it only matters because of our slow and painful emergence from this recession.

This bill is a great thing for microbusinesses. Under the circumstances, I suppose one shouldn’t look a gift horse in the mouth. The Small Business Credit Card Act currently has nine co-sponsors, all of whom are Democrats. Republicans appear to be uniformly opposed to federal regulation of the financial services industry, including the Credit CARD Act. So, with zero Republican support for this bill, there would need to be a forceful show of support from small business constituents or this legislative proposal is unlikely to see the light of day.

Read the original article on MicroBusiness News Briefs blog

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