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Federation, through its fifty state and thirty-one national
trade association affiliates, represents over one million
me today on behalf of the Federation are two representatives
from the state associations in Maine and Delaware.
not only as the representatives of our federation of retailers,
but as spokesmen for the thousands of other small retail busi
ness firms across the nation who offer credit payment plans to
The American Retail Federation is pleased that those repre
sentatives of our state associations can appear here today.
feel that all the thousands of retailers who offer credit to
their customers would be directly affected by the proposed legi
slation and it is important to have the smaller and medium size
retailers represented at this hearing.
AMERICAN RETAIL FEDER
1616 H ST. N.W., WASHINGTON, D.C. 20006 Statement of
JOSEPH N. HANLEY, MANAGER
CREDIT BUREAU OF GREATER PORTLAND, MAINE
On Behalf of
THE AMERICAN RETAIL FEDERATION
SUBCOMMITTEE ON CONSUMER CREDIT
FAIR CREDIT BILLING ACT
(s. 914, S. 1630)
May 24, 1973
AMERICAN RETAIL FEDERATION 1616 H Stret, N. W. Washington, D. C. 20000
Mr. Chairman, members of the Subcommittee, my name is Joseph N. Hanley.
I am manager of the Credit Bureau of Greater Portland, Maine.
For the past
ten years I have been a member of the Maine Merchants Association, where I
have served as Director and Treasurer in addition to membership on the Legis
lative Committee. The Maine Merchants Association is a non-profit organization which represents over 400 retailers in the state of Maine, the bulk of which are small, independently owned business firms.
Today I am appearing as a representative of the Maine Merchants Association
and, in addition, I am appearing on behalf of the American Retail Federation. The Federation, through its fifty state and thirty-one national trade associa
tion affiliates comprising a membership of over one million retail establish
ments, represents thousands of other small retailers across the United States. My remarks today are on behalf of these small retailers, nationwide.
The thrust of my comments are not directed at the entire bill, but
rather to the following sections:
Definition of creditor (S 914, $103; $ 1630, $103)
Length of Billing Period ( 914, $163; S 1630, 8163)
Prohibition of Minimum Finance Charges (S 914, $168) Although I do not intend to imply that the other sections of the proposed bills do not warrant comment, these sections mentioned above are the ones that I feel affect small retailers most directly. I feel sure that other witnesses will comment adequately on the remaining sections.
As a manager of a credit bureau, I am naturally interested in fair credit
practices. My customers are the retailers and others to whom consumers apply
for the use of credit.
It is this relationship with the retail community that causes me to question and even object to the definition of "Creditor". Presently, the Truth-In-Lending provisions cover creditors only if the assessment of a
finance charge is involved.
As I read these bills, this definition would be
extended to cover all grantors of credit including those who offer what we
call "Open Accounts". The bulk of small retailers offer this 30 day open
account that does not impose a finance charge. It is also widely used by service stations, the corner grocer, the hardware store, and the professions such as lawyers, doctors and dentists. From where I sit, extending coverage
to all of these people doesn't make much sense.
Businessmen in small towns depend on their friendly service and the
development of personal relationships with their customers in order to build
a profitable business.
One of the ways they do this is to bill their customers
on a 30 day open account for merchandise or services.
It is simply a conven
ience they offer their customers.
They do not have formal billings systems,
computers and sophisticated billing machines. Their 30 day open accounts are not presently covered by the Truth-In-Lending laws. These small business
men would be forced to either hire expensive outside help in order to comply
or stop offering their own credit plans.
Certainly all small retailers agree with the need to properly correct billing errors. However, as it is presently written, this section does not give the businessman the benefit of good faith compliance. A provision for such good faith compliance is needed in this bill to protect legitimate businesses when they have made an honest and sincere effort to comply with
its provisions. Without this provisions, small retailers may find themselves
victims of small technical violations. Sophisticated attorneys could take advantage of these situations and severely harm the retailer without performing any substantive good for the consumer. This could easily result in
higher prices and less competition in the consumer marketplace because of
this increased risk of doing business.
I question whether Section 162 of s. 914 and s. 1630 should be included
in this legislation.
These provisions might more appropriately be considered
as amendments to the Fair Credit Reporting Act.
The proposed section entitled "Length Of Billing Period" could perhaps be better titled "Early Mailing Of Statements". The effect of this section
is that a merchant must mail his statements at least fourteen days before
payment is due.
We do not disagree with doing this.
Certainly the retailer
already has every incentive to mail his statements as early as he can.
retailer needs the early cash flow in order to pay his own bills in time.
The retailer needs the money generated by his billing statements to buy
more merchandise. If there is to be a time limitation requirement, a clause
protecting the merchant from unavoidable circumstances is needed. There needs to be a provision to protect retailers in case of a natural disaster,
an accident or fire affecting his ability to prepare statements, especially for a small retailer, during a period of extremely high usage of credit such as at the Christmas or Easter seasons. As I have said, the retailer
already has sufficient reason to bill as early as he can and certainly will make every effort to meet the proposed 14 day requirement. He should not be subject to penalties caused by situations beyond his reasonable control. I do not think that this adjustment will be harmful to the position of the
customer but it is certainly needed by the small retailer.