The Consumer Financial Protection Bureau has taken steps to safeguard consumers from credit card rewards programs that may be in violation of federal law. This action comes after a CFPB report in May 2024 highlighted consumer dissatisfaction with the terms of certain credit card rewards programs, citing issues such as confusing rules, misleading promotions, difficulty redeeming rewards, devaluation of rewards, and rewards being revoked without warning.
According to the CFPB, credit card companies could potentially break the law in three ways. Firstly, by lowering the value of earned rewards, which could be considered a deceptive practice. Secondly, by burying important details in the fine print, leading to consumer confusion. Lastly, by failing to allow consumers to redeem points due to system failures, causing frustration among cardholders.
Issuers found to be in violation of federal law could face financial penalties, as seen in previous cases involving American Express and Bank of America®. For example, American Express had to pay $85 million to consumers in 2012 for violating consumer protection laws, while Bank of America® paid $100 million to consumers in 2023 for consumer-harming actions, including issues related to credit card rewards.
If consumers have complaints about their credit cards or other financial products, they can report them to the CFPB through the consumerfinance.gov/complaint website or by calling (855) 411-2372. Employees of financial institutions can also report violations they believe are occurring at their company by emailing [email protected] or calling (855) 695-7974.
Additionally, the CFPB has launched “Explore Credit Cards,” an online tool that helps consumers search for credit cards, with a focus on those with lower interest rates. Many of the options featured on the platform are issued by credit unions, which have membership requirements for card applications. the following would make sense: “Please rewrite the sentence so that it is clearer.”