The Consumer Financial Protection Bureau is reviewing whether credit card rewards program are misleading to credit card users.
Results of the review may be new. Strict rules about the transparency of rewards programs, including details about cash back offers, mileage awards and how these rewards must be redeemed.
In an email to Bloomberg News, CFPB Director Richard Cordray said, we will be reviewing whether rewards disclosures are being made in a clear and transparent manner, and we will consider whether additional protections are needed.
Credit card issuers like American Express, Bank of America, Chase, Citi and Discover rely on rewards programs to attract new customers as well as increasing the use of their cards by existing cardholders. Rewards are the No. 1 reason why customers select the card, and there’s almost a battle to provide the highest rewards.
What we’ve learned over time is, our best customers value rewards. Their spend behaviour changes based on rewards, said Edward Gilligan, the President of American Express.
The CFPB’s restrictions could put a damper on each company’s ability to draw in new cardholders.
While there are no apparently abuse issues with rewards programs at this time, the CFPB is taking the initiative to catch a problem before it happens.
Keep an eye out for notices from your credit card issuer about changes in your rewards program. Changes, or at least clarifications, could come as a result of this examination.
