PYMNTS MonitorEdge May 2024

CFPB Says It Is Monitoring Credit Card Rewards Programs

man with credit card

The Consumer Financial Protection Bureau (CFPB) said Thursday (May 9) that it will be monitoring credit card rewards programs and taking action as appropriate.

This statement came as the agency released a report detailing consumers’ complaints about these programs.

“Credit card companies promise upfront benefits for signing up and using their rewards card, but often bury complex terms in the fine print for using the rewards,” CFPB Director Rohit Chopra said in a press release about the report issued Thursday. “The CFPB will be looking for ways to protect peoples’ points, stop bait-and-switch scams, and promote a fair and competitive market for credit card rewards.”

One of the issues that consumers have reported to the CFPB are requirements that are detailed in the program’s terms and conditions and do not match what was said in marketing materials, creating a “bait and switch” issue, according to the release.

Consumers also complain about rewards that are devalued, either by the card issuer or a rewards program partner, the release said.

Other complaints include difficulties encountered when trying to redeem earned benefits and companies revoking earned rewards when an account is closed or when rewards expire, per the release.

“Federal consumer protection laws apply to rewards programs offered in connection with consumer financial products or services,” the CFPB said in the release. “The CFPB has taken action against credit card issuers such as American Express and Bank of America for engaging in unfair, deceptive or abusive acts or practices related to rewards programs.”

“CFPB will continue to monitor credit card rewards programs and will take necessary action on these issues as appropriate,” the agency added.

In the action taken against Bank of America in July 2023, the CFPB ordered the bank to pay more than $250 million in penalties and restitution to customers. One of the practices cited by CFPB was the bank’s failure to pay reward bonuses explicitly promised to credit card customers.

The action against American Express was taken in October 2012 and included a charge that the company led consumers to believe that they would receive $300 in addition to bonus points if they signed up for a program, but then did not deliver the $300 to those who met the qualifications.