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4mo ago

CFPB Warns Credit Card Issuers Over Deceptive Rewards Practices

The federal agency highlights illegal tactics like devaluing rewards, hidden terms, and high retail card interest rates, launching a tool to empower consumers.

A sign advertising a credit card offering a discount at Whole Foods and Amazon is seen outside a Whole Foods store in Los Angeles, California, U.S., February 26, 2018. Picture taken February 26, 2018. REUTERS/Lucy Nicholson
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Overview

  • The Consumer Financial Protection Bureau (CFPB) warns that credit card companies may be breaking federal law by devaluing rewards points, canceling earned rewards, or burying terms in fine print.
  • The CFPB criticized store-branded credit cards for higher average interest rates, with 90% of retail cards carrying APRs above 30%, compared to 38% of general-purpose cards.
  • Consumers have reported significant issues with redeeming rewards, including technical failures and vague or hidden contract terms that obstruct access to promised benefits.
  • To address these concerns, the CFPB launched the 'Explore Credit Cards' tool, allowing users to compare over 500 credit cards based on unbiased data on fees, rates, and rewards.
  • The agency emphasized its commitment to promoting competition in the credit card market and protecting consumers from deceptive 'bait-and-switch' practices.