A “Credit Cards and Small Business Usage Report” has been released by ChangeInTerms.com:
“CREDIT CARDS AND SMALL BUSINESS USAGE REPORT“
An issue that arose when Chase Card Services decided that it did not want to honor a promotional offer as was indicated by a change in terms notice that it disseminated to customers late last year (i.e., beginning around November-December of 2008). This report allows readers to gain a better understanding of the nature and scope of credit card usage by small businesses. We especially highlight entrepreneurial bootstrappers (who often use credit cards as a non-traditional source of capital).
The publication is organized in sections, and the information is “based on a variety of authoritative sources including U.S. Census Bureau, Federal Reserve Board, and Small Business Administration data, in addition to previously published research studies,” said Dr. Robert Lahm, founder of the ChangeInTerms.com site. The publication also includes information about several class action lawsuits that have already been filed against Chase. Dr. Lahm, who is also an entrepreneurship professor employed by Western Carolina University’s Center for Entrepreneurship and Innovation (CE&I), explained that he created the site in protest and to fight abusive credit card company practices in general, “but it just so happens that Chase’s recent actions are viewed to be among the most deplorable and unethical moves that I know of, with painful consequences for many small businesses that could certainly have a lasting impact on our economy.”
Dr. Lahm said the present publication was developed primarily for three audiences: individuals who either have or may soon experience “Chase statement shock” when they discover a substantial increase in their monthly minimum payments (which is two-and-a-half-times larger than their previous payment); members of the general public who are typically only getting a one-sided view of this issue (“because journalists are not digging deep enough”); and, for would-be or current small business owners. He added that while the document is copyrighted, other writers and bloggers my find the report useful (and it may be freely shared).
Citing an example of media spin, Chase spokespersons (and other correspondents in letters) keep calling a new $10 monthly charge a “fee” or a “service charge.” Therefore, said Lahm, “we have responded with the whole truth in this report as it is critical for people to understand that inflicting further pain on either consumers or small business owners is an absolutely reckless thing to do”:
Chase spokespersons as well as correspondence from Chase (and reports from consumers attempting to negotiate by phone) are insistent on calling a new $10 monthly charge, a “service charge,” but according to the change in terms notice: “The charge is $10 per month ($120 total annually), and it is a finance charge.” Thus, the promotional rate has been violated. Note that the founder of the CHANGEINTERMS.COM site pointed out to the CEO of Chase Card Services that, apparently, Chase had for once, made a mistake with its own “fine print.”
If an entrepreneur has a $20,000 “fixed APR Until the balance is paid in full” loan with Chase, which could be associated with the start-up costs for quite a variety of small businesses, what may have been a very manageable $400 per month payment skyrockets to $1000 per month with the newly imposed 5% of the balance per month calculation, “a crushing blow for a fledgling business at a time when we need to do everything we can possibly do as a society at large to nurture entrepreneurs, not annihilate them.” The $600 increase could also cause the loss of a part-time employee or have a number of other ripple effects. This example does not necessarily imply that the $20,000 charged to a personal credit card account was used for business purposes; it could be the case that the loan was used for living expenses, while the business was getting started and just beginning to realize cash flow.
Lahm added, “I think that one day this whole incident is going to become a classic textbook case study in failed leadership, ethics, and incompetency in management, and this present publication is useful to me as an outline as I work on this. I believe that there are a whole lot of great ‘teaching moments’ at hand in this matter with Chase. In my present line of work, this strikes me as something good — teaching future generations — coming from something very, very bad, with some horrible repercussions for a lot of innocent people who, by the way, have been meeting their payment obligations to Chase, and do not deserve this kind of treatment from a bank that’s also double-dipping and feasting on $25 billion of taxpayers’ bail out money.”
ABOUT CHANGEINTERMS.COM
CHANGEINTERMS.COM is a consumer protest site, created by Dr. Robert Lahm, Jr. (a university entrepreneurship professor), in response to credit card companies and their mistreatment of many account holders (including himself). Dr. Lahm’s research agenda includes entrepreneurial bootstrapping (which often involves the use of credit cards as a source of start-up capital), about which he has also addressed in previous testimony before Congress. The site provides vibrant discussion and analysis, links to government, regulatory, and advocacy organizations, and sometimes more than a little sarcasm – along with serious critique – about the activities of credit card companies both individually, and as an industry. While the site laments that it can’t actually change terms from a legal perspective, it submits terms and conditions can be changed with credit card companies from a consumer perspective. Even with little help from current laws or regulators, consumers can still fight back. The site declares in a message to credit card companies:
NOW WE’RE COMING AFTER YOU
I have two CHASE CREDIT cards without balances and not having one for approx. one year. I have other credit cards and all have “0” balance and I know I’m fortunate being the current economy. I work for the largest retailer in the world. Today, I went to one of our stores to purchase a HDTV totaling less that $900. I presented one Chase Card and declined and presented the second and declined. Obviously being I’m in a place where I am known I found myself in a very embarrassing situtation. I was never notified of these two accounts being cancelled at any time. One week prior to my attempting to use these cards today (8/19/09) I received the usual several check offer to use two for purchases and the others, etc……..Fortunately, I did not write aCHASE check for my purchase today or it would have bounced and I could have possibly been fired for giving them a bad check, which I have never done in my Junior and now senior years. It is policy of my company to terminate or address a employee if same is done.
I understand the changes being made by the credit card companies but it was also my understanding they had to notify you prior to or letting you know they were going to cancel your cards.
Being a CHASE CARD(s) HOLDER for many years and have taken advantage of their offers previously and never defaulted, I cannot believe that this company has lowered itself to these standards. They have just merged and are offering many options to new customers. It was my intention to change from Bank Of America, whom I have never encountered a problem (YET) and go with CHASE based on the exceptional offers and treatment I have always received over many years. Obviously, this thought has been deleted from my head. I had planned on doing a search for their executive office but from what I am hearing, reading and obviously experiencing, I would only add my name and complaint to the thousands that have already done so.
Therefore, I thank you for letting me vent and hopefully others will pull out of CHASE and support the smaller financial struggling institutions.
Thanks for this opportunity.
Don K. Winstone
P.S. – I was able to get my HDTV by using another credit card from a company that hasn’t lowered themselves as of this date.
[…] had hoped for a little less “about me” and a little more about the small business issue. That being said, if the article directs traffic to the ChangeInTerms.com site, at least visitors […]
[…] read more about small businesses and credit cards in a report that I have published here: “Credit Cards and Small Business Usage Report.” Share and […]
[…] calls) “to juggle business expenses on his personal cards.” Hence, given that we need to support entrepreneurs, I remain concerned on that basis as […]
[…] they intended all along, to change terms and impose higher fees and rates. (I was discussing this in the context of small businesses and their use of credit cards, but it applies to any account type.) Actually, the wording, “restrictions on how cards […]
[…] One of my very biggest concerns, is for small business people (and how squeezing them right now is a very bad idea for the economy and any hope we may have for a […]