Mediahound

You haven't proven/shown that carrying a balance or not really changes anything with regards to the protections or lack thereof either so I'm not sure where you get that idea?

Think about it, it's not like if you don't carry a balance on a business credit card, it suddenly turns into a consumer credit card with all of the consumer protections or something like that.

mia

No, but the Forbes article mentions three, and only three, "hazards" of using a business card:

• raising the interest rates on existing balances
• penalty rate
• direct payments to the lowest interest rate first,

None of these matter if you do not carry a balance, because your interest rate will be zero.

I understand that you are thinking about other types of protections, but such are not discussed in that article.

Mediahound

Refer to other articles and the TV report above as well. Don't just rely on one article that may not list out all the negatives.

The fact is business credit cards don't give you the same consumer protections. Period. No amount of trying to put lipstick on the pig can cover up the fact that the CARD act does not protect business credit card transactions since it only applies to consumer credit cards.

2tall4economy

In the legal article you posted, it appears the situation was that the card user bought a service that he didn't want because he didn't see the fine print. If he received the service then I'm not sure he could dispute frankly.

In the case where it was a bill for 222 dinners, I think that's easy to dispute; heck it might even be a fraud lawsuit against the bank.

biggestbopper

I didn't post an article, rather a real, live US Supreme Court decision. And, not only did the card holder dispute the charges, it disputed them all the way to the Supreme Court--and lost because it was a business card.

And, disputing a charge is waaay different from getting a card issuer to comply with the law when they don't want to--or, in the case of a biz card, don't even have to.

Unless someone has actually taken one of these cases to Court and won, uninformed opinion blythely asserting how easy it will be isn't worth a whole heck of a lot. It ain't easy. And, if you have a biz card, it's likely to be impossible to come out ahead because your legal position is somewhere between weak and impossible.

Bottom line: biz card do not have consumer card protections and are very dangerous for that reason. Folks are usually happy with their biz cards until they are not. And then, they can be very, very unhappy.

mia

I read it. There were no specifics, just generalizations. The article acknowledges that, business cards serve a real purpose.... What I am trying to do with thread is consolidate material to help people decide if such cards are appropriate for their circumstances. We need better information.

In the Koener case the dispute was with American Express itself, the customer had witheld payment, and American Express had closed his account. Koener is a useful data point, but doesn't tell us how American Express deals with a routine dispute which they can chargeback to the merchant. I have disputed inaccurate charges on business cards and the process was exactly the same as on a personal card.

biggestbopper

The Supreme Court case is not just a "useful data point." It is the law nationally for non-applicability of consumer protections under the Fair Credit Billing Act to biz cards.

What matters is what happens when Amex or other issuer refuses to correct a problem--what recourse does the card holder have. With a biz card, not much. With a consumer card, considerable legal protection.

Amex may or may not treat a biz card issue in way that satisfies the card holder--but what if it (or any other card issuer) does not. You have no realistic recourse.

May not really matter if the charge is for $7.97, but, what if it is for $9,849 for a long term hotel stay in a town and country you have never been to and didn't authorize?

I agree up to a point that some card issuers do resolve biz card issues for small sums in an often acceptable way--but, what if they don't? Kiss your money or your credit rating good-bye. IMHO, depending on the not legally mandated mercy of banks is a poor financial strategy.

As to biz cards serving a real purpose, from the consumer point of view, they don't. Given, unless special terms can be negotiated with the card issuer (and, they can't be , unless, maybe you are a very large corporation) you have to accept personal liability for the charges as part of the form contract the only real purpose is to duck consumer protection law coverage.

mia

Understood, but credit card specific laws are not the only legislation that govern credit card accounts. I don't agree with the notion that you have no realistic recourse. It's a contract, both parties have rights and responsibilities.

In any event, what is missing from these discussions is information about practice. Do American Express, Bank of America, Barclays, Capital One, Chase or Citi actually refuse to remove unauthorized charges from business credit card accounts? My question is not could they refuse, but rather how do they conduct their business.

Happy

mia,

The Supreme Court case is not "just a data point". It is a LEGAL PRECEDENT CASE. I am quite surprised by some of you here take the cases cited as "an article" or "another data point".

The discussion you keep pounding on is academic. You can debate till the cows come home I personally dont give a hoot - sorry, I just dont want to be in a position to find out IF the card issuers would do the right thing. I want the full legal protection as defined by law, not by the bank's ethics (as they have none) or their practice.

Business cards are better to leave for real business usage as your company or other companies do. For individuals, it is better to stick with consumer cards.

saradon

Yes, but with a consumer card how the bank must handle the dispute is laid out in the laws, and I believe the burden is on the bank to prove the charge valid (e.g., with a charge slip showing your signature or other evidence.) With a business card, there is no such burden and you can find yourself given an 'equal' (note: irony) opportunity to hire a lawyer or go pro se against the bank and its attorneys in a contract dispute in court. Lots of luck with that, not to mention the costs and time.

I think what is missing here is the bias that should be applied when getting a business card and not using it according to its terms. All the Business cards that I have looked at state in their small print (which you should always read, of course) that they are either solely or primarily for business use. If you are not doing that, then you should proceed with caution that anything you are doing may not be allowed (e.g., renting a car with it and expecting to be insured, buying something outside of your home state or more than 100 miles away from your mailing address and expecting protection if you are dissatisfied with the quality of the item by disputing the transaction rather than having to file a lawsuit), rather than assuming that things may be OK unless specifically proved otherwise.

Examples of such terms:

AMEX Plum card:

By submitting this application, you, as an individual and the Authorizing Officer of the Company, (a) are requesting us to open an Account in the name of the Company, (b) are requesting that we issue Card(s) as you direct, (c) are agreeing to be jointly and severally liable with the Company for all charges to the account, and (d) are REPRESENTING THAT ALL CARD(S) ISSUED ON THE ACCOUNT WILL ONLY BE USED FOR COMMERCIAL OR BUSINESS PURPOSES. [Note: emphasis theirs, not mine.]

https://www262.americanexpress.com/b...0/?key=tncBody

If you start off using a business card for personal expenses, I think you should assume that you may not get any of the benefits if anyone found out about it, or expect that they could demand you repay them if they did find out, especially if they find out when in a dispute of some sort with you. In short, the relationship you establish would be based upon what seems like a fundamental misrepresentation - namely, that you are a business if you are not.

I don't think that is a good way to start a credit relationship so one should proceed cautiously, if at all. Not all terms are as unequivocal as this one from AMEX, but you should certainly read them, because all the ones I have seen are pretty similar.

Citibusiness World Mastercard:

Application must be verifiable and accurate. Both you and the Business shall be liable individually and jointly for all charges and balances on the Account. The Account established and Cards issued hereunder shall be used for business purposes and shall be governed by the cardmember agreement ("Card Agreement") provided when the Card is issued, and as it may be amended from time to time.

https://www.accountonline.com/ACQ/Di...F_CODE=&AAPID=

Another point -- debt collection practices:

Here are the debt collection safeguards FOR CONSUMERS from the Federal Trade Commission:

http://www.ftc.gov/bcp/edu/pubs/cons...dit/cre18.shtm

Think they apply to business - they do not. I cut and pasted a relevant paragraph:

What types of debts are covered?

The Act covers personal, family, and household debts, including money you owe on a personal credit card account, an auto loan, a medical bill, and your mortgage. The FDCPA doesn’t cover debts you incurred to run a business. [Emphases mine.]

So -- if you obtained a credit card that stated it was for business purposes and got into a dispute or could not pay charges you made on it (remember, no one intends to not pay, most bankruptcies result from unanticipated medical expenses, then job loss, from what I remember), they (the debt collector representing the card issuer) are not necessarily obliged to give you protections under the Fair Debt Collection Practices Act if you get into trouble and can't pay. (Calling 20 times a day and night and at home and at work, anyone? ) Any disputes -- back to court, at your own expense and on your own time. Provided they haven't also taken those rights away by arbitration.

If no one knows and things go fine, then I guess you can 'get away with it' but if things go wrong, it seems to me, they can get fairly unpleasant, much more so for a business than for a consumer. So you should take care, or not go down this road -- IMHO.

http://www.debt-collection-laws.com/...tion-laws.html


Just my .02. Hope it is helpful as (several) words of caution. It's meant to be.

Often1

None of the vast new protections afforded consumers under Dodd-Frank, including an entire Federal agency, CFPB, dedicated to going after consumer financial fraud, apply to business cards.

The single largest issue for most consumer cardholders is the ability to dispute a charge, not for fraud (as that term is strictly defined under Dodd-Frank and companion state laws, not just because you don't like the snotty hotel clerk), but for other non-fraud reasons.

You also have little to no protection in bankruptcy and indeed in a bad business climate where you can't make a credit card payment (including where your employer goes bankrupt and you don't get reimbursed the $25K in travel they owe you), you are dead in the water.

jbsack

Legalities aside, most accountants that I have ever worked with will warn you NOT to use a personal card or personal account for legitimate business expenses. It can be very dangerous from a TX and IRS standpoint to co-mingle funds (and credit). Also, none of the business cards I have report to my personal CR so those lines and balances do not adversely affect my FICO score (although most will report in the event of a default).
The long and short is that there are specific reasons for both business and personal cards and while there may not be all of the consumer protections with a business card, there are clearly other VERY SIGNIFICANT BENEFITS and a real danger tax wise to using personal cards for business or vice versa.

biggestbopper

Nope, IMHO, not so. While it may be important from an accounting standpoint to use a SEPARATE account for biz expenses and not use the same account used for personal charges this does not mean use a biz card account. Just means have two personal accounts. Which keeps your legal protections intact.

Indeed, it may be better to use the same card for both biz and personal expenses since some card companies may argue that using a personal card for biz charges alone somehow converts it into a biz card which is not covered by the Fair Credit Billing Act--not so, but why even risk it.

The FCBA is your friend--the card companies, not so much. Unless they are giving out big bonus miles!

LegalEagle

Very helpful post Happy. I knew that the federal consumer protection laws did not apply to business cards, but didn't wory about unilaterial escalation of rates because I always pay the balance off in full each month. Also didn't think there was much danger of fraud losses.

But I have used the card to rent cars. And I never realized that the issuer would decline coverage for an accident because the rental was not for a business use. I am now going to more-or-less retire the business card and only use the personal card.

mia

Read the terms of your specific card agreement. For example, Chase Ink Bold provides primary coverage if the rental is for business use, but only supplemental coverage if the rental is for personal use. The coverage is different, but it still applies.