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CFPB to Investigate Credit Card Reward Programs Following Consumer Complaints

The Consumer Financial Protection Bureau (CFPB) will reportedly take a closer look at credit card reward programs.

This move follows an increase in the number of complaints the agency has received from consumers, CFPB Director Rohit Chopra said Tuesday (March 26), Reuters reported.

Speaking with reporters on the sidelines of a Consumer Bankers Association event, Chopra said that credit card issuers too often tell consumers about rewards without telling them about the availability of a card with a lower interest rate offered by the same issuer, according to the report.

Some credit card issuers also conceal terms and conditions that may allow them to revoke rewards or make the points difficult to redeem, Chopra said, per the report.

Chopra also told reporters at the event that buy now, pay later (BNPL) providers could also face stricter rules, according to the report.

With more BNPL firms selling through their own apps rather than at the point of sale, they are using personal data to “induce more purchasing or borrowing,” which raises issues that CFPB continues to look into, Chopra said, per the report.

The CFPB said in February that scrutinizing bait-and-switch tactics on credit card rewards is one of the measures it is taking to increase competition in the credit card market.

The agency is also promoting switching through open banking, closing loopholes that allow credit card issuers to impose junk fees and promoting credit card comparison shopping, the CFPB said in a Feb. 16 press release.

The CFPB is also developing a consumer-facing tool that will enable individuals seeking new credit cards to compare terms and interest rates in an unbiased manner.

“With over $1 trillion in credit card debt outstanding, the CFPB will be accelerating its efforts to ensure that consumers can access better rates that can save families billions of dollars per year,” Chopra said in the release.

PYMNTS Intelligence has found that credit card rewards programs are one of the primary factors behind consumers’ increasing reliance on credit cards to meet their financial needs. Fifteen percent of cardholders said rewards were driving their growing use of credit cards, according to “Credit Card Use During Economic Turbulence,” a PYMNTS Intelligence and Elan Financial Services collaboration.