The American Bankers Association today asked the Consumer Financial Protection Bureau to withdraw guidance for law enforcement alleging that credit card rewards programs could be illegal under certain circumstances.
The CFPB last year issued a circular for law enforcement claiming that 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 document was published along with a study claiming that retail credit cards can be more expensive than general-purpose cards, and an online credit card comparison-shopping tool for consumers.
In a letter to CFPB Acting Director Russ Vought, ABA asked the CFPB to take down the circular and associated documents, including a separate statement supporting a Department of Transportation inquiry into airline rewards programs. The association said the bureau’s conclusions in the study were not supported by the data. (ABA published an ABA Viewpoint column last year about the bureau’s misleading claims on credit card rewards programs.)
“Contrary to the CFPB’s assertions, credit card rewards programs are widely accessible, valuable and clearly understood by consumers across all income levels,” ABA said. “As one measure, according to the CFPB’s own complaint data, complaints about rewards are exceedingly rare: overall, complaints about credit card rewards comprise 0.09% of all complaints submitted, which is hardly evidence of a ‘concerning pattern.’”
ABA also said the guidance did not go through a public notice-and-comment process for new rules, yet it imposed new restrictions on rewards programs. “This misuse of guidance creates unnecessary confusion for regulated entities, deprives the industry of fair notice and undermines the legitimacy of the regulatory process,” the association said.
Earlier this year, ABA released a survey showing that a strong majority of U.S. consumers are happy with their credit cards and do not want the government to interfere with their cards’ rewards programs. Among the findings, eight-in-10 (82%) respondents said they had at least one credit card that offers rewards, and nine-in-10 (90%) said they value the rewards program on their credit cards.
