CFPB Spotlights Credit Card Reward Troubles

The CFPB recently put out an “Issue Spotlight” on Credit Card Rewards which warned that, in many cases, rewards programs are promoted in such a way that is too good to be true. One reason for the attention here is that, in the past few years, the CFPB has seen more than a 70% increase in the number of complaints specific to credit card rewards programs. In reviewing these complaints, the CFPB noticed some consistent themes:


  1. Unexpected Promotional Conditions

Consumers fail to receive promotional rewards when financial institutions impose vague or hidden conditions…


  1. Devaluation

Consumers lose benefits that they previously earned when issuers and merchants devalue rewards…


  1. Redemption Problems

Consumers face obstacles in receiving their preferred redemptions when companies fail to quickly resolve rewards-related issues…


  1. Revocation

Consumers suddenly lose rewards when issuers unilaterally revoke previously earned balances…

Credit card reward programs are much more common than they once were and many card issuers reserve the right to change these programs at any time, often without notice, putting cardholders at a distinct disadvantage, in the eyes of the CFPB. If you have a credit card rewards program, be sure to keep these concerns in mind. We also encourage you to give the Issue Spotlight a read as it gives examples for each of these particular areas of concern.

As a result of this Spotlight, it’s very possible that your examiners will start to ask some questions related to these programs, even if they really haven’t done so in the past. If your customers have expressed concerns or frustrations and/or made complaints, make sure these are addressed just as any other complaint under your complaint program.

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Amy Kudlacek

Amy brings many years of banking and compliance experience to Banker’s Compliance Consulting. She has worked for both large and small financial institutions and spent time working in every area of a bank. She started out as a teller in college and eventually became a branch manager. Her love, however, was always compliance. Amy began her career with Banker’s Compliance Consulting in 2000. Her knowledge and experiences have allowed her to develop a well-rounded and practical approach to regulatory compliance. Amy is CRCM certified, has a Bachelors Degree in Business Administration and is a graduate of the ABA Compliance School. Amy & her husband have two children at home and stay busy following their activities. They spend a lot of time in the bleachers!

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