The Consumer Financial Protection Bureau (CFPB) has warned credit card companies that devaluing or canceling reward points, cash back, or miles rewards programs may be breaking the law. The agency’s report found that some cards charge significantly higher interest rates than others for store-specific rewards and suggested that companies are using “bait-and-switch” tactics to lure customers into high-interest rate cards.
The CFPB says large credit card issuers should deliver promised rewards, such as cashback bonuses or free airfares, rather than just promising them. The agency has launched a new tool to help consumers compare over 500 credit cards and find the best rates.
Devaluing earned rewards can be an unfair or deceptive practice, according to the CFPB. Companies may also fail to deliver promised benefits through their rewards programs, such as redeeming points or miles. The watchdog group has taken action against American Express and Bank of America in the past for violating these practices.
The American Banking Association criticized the CFPB’s move, arguing that it is “misleading” Americans about credit card rewards programs. However, the CFPB stands by its report, which suggests that some companies are using deceptive tactics to profit from consumers’ loyalty.
Source: https://thehill.com/business/5046401-credit-card-companies-rewards-law