The fight over the Credit Card Competition Act (CCCA) has taken to the skies.
This week, Sens. Dick Durbin, D-Ill., and Roger Marshall, R-Kan., who sponsored the re-introduction of the CCCA in June of this year, penned a missive to regulators on Capitol Hill to look into frequent flyer loyalty and rewards programs, alleging “unfair, abusive, and deceptive practices” tied to those programs.
In the Monday (Oct. 30) letter, addressed to Transportation Secretary Pete Buttigieg and Consumer Financial Protection Bureau Director Rohit Chopra, the senators wrote that “reports have suggested that airlines are changing point systems in ways that are unfair to consumers, including by devaluing points, meaning it takes more points than initially marketed to achieve the promised rewards.”
And, they added, “airlines can make changes to their points programs without notice to consumers, as long as the programs’ terms of service reserve the right to do so. As a result, these programs incentivize consumers to purchase goods and services, obtain credit cards, and spend on those credit cards in exchange for promised rewards — all while retaining the power to strip consumers of those rewards at any moment.”
In the cases where airlines allow consumers to purchase points directly from the airlines’ web sites, the letter contended, “the cost of directly purchasing points can sometimes be three times the value of the points at redemption.”
The battle over the CCCA — and, more generally, the ways in which fees and credit/debit card transactions are themselves structured — has been playing out over the past several months.
In one of the most notable developments, and as PYMNTS reported, Federal Reserve board members heard proposals to lower the cap on debit card interchange fees by nearly 30%. Elsewhere, the CCCA would require that credit card transactions be routed across a choice of at least two competing networks — resulting in lower interchange fees paid by merchants.
On the other hand, banks and other opponents of the legislation argue that if swipe fees are lowered, consumers wind up paying for more expensive services and products at their providers, and rewards programs may be curtailed.
“It would be really, really bad policy for consumers in this country,” said Kirby, who added that “84% of U.S. consumers have some kind of rewards card in their wallet… this [legislation] will kill rewards programs…and will kill debit card rewards programs.”
PYMNTS’ recent coverage has delved into travel plans — and the ways of paying for getting out and about — that are shaping up as we head into the end of the year.
Earlier this month, Jacqueline White, president at i2c, and Ray Chalub, COO of Inter & Co., told PYMNTS that younger consumers are counting BNPL among their favored payment options, as 30% of millennials and 29% of Generation Z consumers used or planned to use BNPL.
But in the meantime, cards offering rewards remain top of wallet, where nearly 64% of consumers are very or extremely likely to use card-linked offers for local travel purchases in the next three months. As many as 60% plan to do the same for purchases related to long-distance travel.