House Approves Credit-Card Reform Bill
According to the National Small Business Association, on Sept. 23, the U.S. House of Representatives overwhelmingly approved NSBA-supported legislation that seeks to reform the practices of the credit-card industry. The Credit Cardholders’ Bill of Rights Act (H.R. 5244) prohibits or limits the credit-card industry’s most egregiously unfair and deceptive practices. It bans universal default and double-cycle billing and precludes retroactive interest rate hikes on existing balances, unless the borrower is more than 30 days late in making a payment.
The House passed H.R. 5244 in a 312-112 vote, with 84 Republicans joining 228 Democrats in support of the measure—despite opposition from the administration of President George W. Bush. Only one Democrat voted against the bill: Rep. Stephanie Herseth Sandlin (D-S.D.). Click here to see how your representative voted.
H.R. 5244 was introduced in February by Rep. Carolyn Maloney (D-N.Y.), chairwoman of the U.S. House Committee on Financial Services Subcommittee on Financial Institutions, and Consumer Credit. Marilyn Landis, NSBA’s then-first vice chair (and now chair), testified during the second of the two subcommittee hearings Maloney held on the need for credit-card reform. Landis spoke to the deleterious effect various credit-card practices were having on her business and the general small-business community. Landis described the many challenges small businesses face in accessing capital and detailed small business’ increasing reliance on credit cards. Landis’ full testimony is available here.
The legislation has been modified since its introduction and now includes provisions that would codify the regulatory changes recently proposed by the Federal Reserve Board (Fed) in order to ensure their enactment and future applicability. For more on the proposed Fed rule click here
NSBA appreciates the House’s decisive passage of H.R. 5244 and encourages the Senate to build on this success. As it considers a $700 billion bailout package, the small-business members of NSBA urge it to include protections for credit-card consumers in any legislation enacted to rescue some of America’s largest companies.