A couple of weeks ago, I received a credit card application that was a bit different from the run-of-the-mill mailers.
Although it was addressed to me personally, and looked like dozens of other credit card solicitations, there was a critical difference: The card being marketed was for a business.
I'm not alone. A recent study shows that American households receive more than 10 million offers for business credit cards every month.
If you look closely, you'll realize that these cards are intended primarily for business use, such as when they ask for your position or mention employee use. But they "generally offer no guidance on what constitutes a business expense, and there are no technical restrictions against using business cards for personal use," the Pew Charitable Trust said in a study of credit card practices.
At one point, it wasn't a big deal whether the card was issued to Kevin DeMarrais or DeMarrais Inc. But that changed with the passing of the federal Credit Card Accountability, Responsibility and Disclosure Act in 2009.
The law adds critical protections and restricts several abusive practices, but these apply only to consumer credit cards. As a result, practices outlawed by the CARD Act "remain widespread on less-regulated card products marketed to millions of American households every month," Pew said.
The Pew study has spurred Sen. Bob Menendez, D-N.J., and three of his colleagues to ask the Federal Reserve to enact new warnings and to extend CARD Act protections to all individuals and small-business owners.
He was joined by Democratic colleagues Charles Schumer of New York, Jack Reed of Rhode Island and Bill Nelson of Florida.
Since the CARD Act took effect, the banks have been "skirting [its] protections by offering consumers credit cards that are designed for businesses," Menendez said last week.
"We can't allow the credit card companies to evade those protections," he said.
In general, credit cards have become safer and more transparent, but not if a card is labeled for business or commercial use, whether the account holder is a large corporation, a small business owner, an employee or an ordinary consumer, the Pew study said.
"While consumer credit cards in general no longer include unpredictable pricing structures and hair-trigger penalty interest rates, these and other potentially harmful practices remain common on business credit cards that millions of individuals use," Pew said. Business cards are even excluded from the Truth in Lending Act.
In a letter to Fed Chairman Ben Bernanke, the four senators expressed concern that card issuers "are marketing these products to ordinary consumers who may not realize they do not offer the same protections as personal cards."
The solution, they say, is for the Fed to "take immediate steps to protect consumers by requiring business credit card issuers … to (a) clearly identify in any solicitation materials that the card being offered is a business card, (b) clearly disclose that the card may not carry all the same protections as ordinary consumer cards, and (c) require applicants to provide a business tax identification number on the application."
The CARD Act gives the Fed the authority to impose those rules, without the need for additional legislation, Menendez said. And if the Fed doesn't act, the newly created Consumer Financial Protection Bureau can.
"I will be upset if the Fed doesn't go ahead and do this on its own," Menendez said. It was given broad regulatory powers so it could be ahead of the curve and respond when needed.
A cynic might claim that the push for business cards for consumers is an end run around the CARD Act, an attempt by the issuing banks to make up for revenue lost by limits the new law puts on their most onerous practices.
In its review of credit card applications from the nation's 12 largest card issuers, Pew said there was no evidence that banks were intentionally trying to sidestep consumer protection laws.
Menendez disagrees.