Washington, D.C. — The National Small Business Association congratulates federal regulators for approving today the “Unfair or Deceptive Acts or Practices” (UDAP) rule, which curtails the most egregious practices of the credit-card industry and provides America’s small businesses with much needed relief.
“More small-business owners use credit cards as a source of financing than any other source of funding, yet 57 percent report that their credit card terms are worsening,” stated NSBA President Todd O. McCracken. “This new rule comes at a critical time when lawmakers and regulators must do everything in their power to ensure that the driver of the U.S. economy—small business—can continue to grow and create new jobs.”
Although NSBA is disappointed that the rule will not go into effect until July 2010, it is gratifying that federal regulators recognize that small-business owners need more than just increased disclosure, and are—for the first time—exercising their ‘unfairness’ authority to address a host of practices that defy free-market capitalism.
The rule, proposed in May by the Federal Reserve Board, the Office of Thrift Supervision at the U.S. Department of the Treasury, and the National Credit Union Administration, will prohibit card issuers from raising the interest rates of existing balances unless a cardholder’s payment is more than 30 days late. The rule also prohibits issuers from treating a card payment as late without giving customers a “reasonable” amount of time to make a payment or utilizing double-cycle billing. The rule strengthens disclosure rules by requiring credit-card issuers to disclose in any solicitation the factors that determine interest rates.
“My business has been the victim of the credit-card industry’s unfair practices and I have 30-plus years of banking expertise under my belt,” said NSBA Chair Marilyn Landis. “While this rule is an important first-step, Congress must take up this rule—and additional measures—to ensure basic fairness for all small businesses that rely on credit cards.”
NSBA was an early proponent for credit-card reform, endorsing key legislative proposals in the 110th Congress and is pleased to see the final UDAP rule reflect many of its stances. The UDAP rule is a clear signal of the broad recognition that the credit-card industry needs reformed, unfortunately it leaves wide-open the door for credit-card issuers to take further advantage of consumers in the next year-and-a half until the rule goes into effect. NSBA will continue urging Congress to enact the strong safeguards necessary to protect small businesses role in stimulating the U.S. economy—protection that is needed now.
To learn more about NSBA’s credit-card reform proposal, please click here.
Since 1937, NSBA has advocated on behalf of America’s entrepreneurs. A staunchly nonpartisan organization, NSBA reaches more than 150,000 small businesses nationwide and is proud to be the nation’s first small-business advocacy organization. For more information, please visit www.nsba.biz