Credit card issuers can violate the law if they devalue the rewards that customers earned with their cards or inhibit those same customers from redeeming promised rewards, the Consumer Financial Protection Bureau said today in a circular to law enforcement agencies. The document was published along with a CFPB study claiming that retail credit cards can be more expensive than general-purpose cards, and a new online credit card comparison-shopping tool created by the bureau for consumers.
According to a CFPB summary of the circular, the document alleges credit card issuers may violate the law when they devalue earned rewards, hide the conditions for earning and keeping rewards, and fail to deliver promised benefits. It also states that covered persons that offer, provide or operate credit card rewards programs “may be liable for an unfair or deceptive act or practice where some of the conduct in question may be attributable to a third party or service provider, such as a merchant partner.”
In a statement, ABA President and CEO Rob Nichols said the CFPB announcement was just the latest example of bureau Director Rohit Chopra putting politics over policy. Nichols noted that consumer complaints about credit card rewards are exceedingly rare, making up only about 0.09% of all the complaints submitted to the CFPB. In addition, a recent survey found that nearly eight in 10 (79%) consumers have at least one credit card that offers rewards.
“The decision to focus on an area where complaints are extraordinarily uncommon as a way of creating political pressure is beneath any government agency and a disservice to American consumers,” Nichols said.
In addition, Nichols said that the CFPB’s comparison-shopping tool was more likely to confuse rather than educate customers. “Americans pick credit cards for a multitude of reasons including rewards and other benefits,” he said. “By focusing so much on interest rates, especially for the tens of millions of cardholders who pay their bills in full each month, the bureau risks steering consumers into the wrong card choices for their needs.”
