Credit CARD Act of 2009 changes the rules, creates new patterns for sewing retailers

If you're unaware of The Credit CARD (Accountability, Responsibility and Disclosure) Act of 2009, keep reading. The law, which was signed last May, will have a profound effect on your retail business.

In accordance with the new regulations, revolving promotions that are less than six months in duration (i.e., "90 Day" promotions) will no longer be allowed as of February 2010. Additionally, the Office of Thrift Supervision (OTS) has instituted guidelines that also impact promotional financing, and as a result revolving promotions that do not require a minimum payment (i.e., "No Pay" promotions) will also no longer be allowed as of February 2010.

Despite these changes, there are a variety of private label financing promotions still available today, including "with payment/no interest" promotions from lenders like GE Money. Additionally, many lenders are proactively driving new product development efforts designed to identify and introduce a number of appealing promotions in the future. GE Money is providing information on these new programs to its retailers throughout 2010.

WHO these changes impact
The Credit CARD Act affects financial institutions and businesses that offer revolving credit programs, as well as consumers who utilize them.

WHAT this means for the future of promotional credit
Research indicates that consumers may have less access to credit, and will seek promotional financing as a way to structure their budget and to make a purchase affordable with predictable payments over time. Promotional financing in the form of deferred interest terms and extended payment programs will continue to be a valuable tool to help consumers get the products they need. Sewing retailers who offer promotional credit will continue to enjoy a competitive advantage and higher customer satisfaction.

WHERE sewing retailers can find resources
As a leader in the financing industry for over 70 years, GE Money remains dedicated to serving the sewing market for the long term and is helping retailers large and small navigate the many changes driven by new regulations. Check out www.gemoney.com for more information.

HOW retailers can ensure compliance with the new government regulations
GE Money's new Web-based Business Center enables businesses to manage finance programs, help drive sales and ensure compliance with new mandatory government regulations. Businesses can be confident that all materials and information they offer and access on Business Center is up-to-date and fully compliant.

"The Business Center offers a full suite of tools to help our partners take more control of their financing program to grow their business. The timing of its availability could not be better as we work through the changing regulatory environment in 2010. We're here for the long term and continue to invest in processes and tools that retailers need to be successful," said Pagliarini.

Business Center is free and available to retailers who use GE Money finance programs -- you can register at www.gemoney.com.

WHAT this means for private label financing companies
The changes affect all lenders of consumer credit and require banks to comply as scheduled. This means that some new consumer protections under the CARD Act are already in effect, including the requirement that card companies provide customers with 45-days advance notice and ability to opt out of pricing changes including: interest rate increases; late payment fee; over-the-limit fee; and returned-payment fee.

With the aforementioned changes taking effect in February (and more to come in August), card issuers are working diligently to comply with new consumer protections. Lenders like GE Money have already modified cardholder statements, systems, processes, marketing materials, signage, disclosures and other items to provide accurate information that reflects the new requirements.

If you haven't discussed the Credit CARD Reform Act with your credit vendors, reach out to them immediately. Take all the information received from various lenders and implement those instructions carefully. If you supply your own in-house financing, take the time to understand how these rules apply to your business.

The sooner you do this, the better -- it's one less thing you'll have to worry about after Feb. 22.

Reprinted from SQE Professional, February 2010