CFPB Reports ‘Dramatic’ Increase in Complaints About Card Rewards

America’s leading consumer finance watchdog is warning credit card companies not to devalue rewards points.

The Consumer Financial Protection Bureau (CFPB) issued a policy circular Wednesday (Dec. 18) arguing that companies that devalue or cancel those points could be breaking the law.

“Rewards program operators often assert their ability to unilaterally modify credit card rewards programs, which has caused at least one state to take action to provide consumers with additional protections against such unilateral program modifications,” the circular said.

“Additionally, the number of consumer complaints that the CFPB receives about credit card rewards programs has also risen dramatically in recent years.”

The regulator said provisions against unfair, deceptive and abusive practices mean authorities could punish card issuers which reduce the value of such rewards based on fine print, hidden terms or technical errors.

The circular also notes that rewards programs are increasingly used to encourage customers to sign up for cards, with rewards cards accounting for 75% of general purpose cards by the end of 2022. The use of rewards cards “is growing fastest among deep subprime, subprime, and near- prime consumers,” the CFPB said.

The bureau’s effort comes at a time when its future as an agency is uncertain. When President-elect Donald Trump takes office next month, he could likely make sweeping changes to the CFPB’s regulation and enforcement policies, while some members of his team have proposed shuttering the agency.

The CFPB is also engaged in a legal battle over its cap on credit card late fees at around $8, with a federal judge recently upholding an order blocking that limit from going into effect.

Meanwhile, PYMNTS wrote last week about the 53 million Americans who don’t have a credit card and are considered “credit card outsiders,” a diverse group that includes younger people hoping to build credit and older, cautious consumers.

A recent PYMNTS Intelligence/Atelio report, “Prime Candidates for Secure Credit Cards Include Young and Wealthy Consumers,” examines how secured credit cards offer a solution for these consumers, providing a controlled entry into the credit market. It also explores strategies for financial institutions (FIs) to target these consumers, especially those looking to obtain their first credit cards (the “credit curious”) or those who cards but lost them (“second-chancers”).

“The data is clear: 81% of second-chancers and credit-curious consumers express interest in secured cards, reflecting their openness to using this tool for credit management,” PYMNTS wrote, noting that 25% of consumers with no plans to use credit cards still show some interest.