US watchdog warns credit card issuers not to devalue rewards (updated)

Discover Financial Services

18/12/2024 17:34

(Adds industry reaction in paragraphs 5-6)
       Dec 18 (Reuters) - Credit card companies that devalue or
cancel the rewards points, cash back or miles that cardholders
have earned may be breaking the law, the top U.S. watchdog
agency for consumer finance warned on Wednesday.
    In a policy circular, the U.S. Consumer Financial Protection
Bureau said prohibitions against unfair, deceptive and abusive
practices mean authorities may punish card issuers that slash
the value of such rewards based on fine print, hidden terms or
technical glitches.
    The CFPB distributes such circulars to other agencies,
including state attorneys general and local regulators, that
enforce federal consumer financial laws.
    As of 2022, three-quarters of all general-purpose credit
cards were rewards cards and many consumers choose which to
apply for and use based on the rewards offered, according to the
CFPB.
    Industry groups reacted negatively, accusing the CFPB of
chasing headlines and tarnishing a popular product.
    Rob Nichols, president of the American Bankers Association,
said in a statement that complaints about credit card rewards
were "extraordinarily uncommon" and accused the CFPB of putting
political pressure on card issuers.
    U.S. President-elect Donald Trump has yet to name someone to
run the CFPB next year but observers say the agency is virtually
assured to take a very different approach to enforcement and
regulation. Trump ally Elon Musk has called for abolishing the
agency.
    Republican lawmakers have also demanded that financial
regulators cease issuing new regulations until Trump takes
office, a call the CFPB has not heeded.

 (Reporting by Douglas Gillison; Editing by Richard Chang and
Bill Berkrot)
 ((douglas.gillison@thomsonreuters.com))