Beware Bait-and-Switch Credit Card Rewards Programs Warns CFPB | Global News Avenue

The Consumer Financial Protection Bureau (CFPB) said Wednesday that credit card companies and store credit card issuers with rewards programs may be violating the law.

“Large credit card issuers often engage in scams to lure people into purchasing high-cost credit cards, increasing their own profits while depriving consumers of the rewards they deserve,” said Rohit Chopra, director of the Credit Card Center . CFPB.

The timing of the CFPB’s warning is no coincidence. Consumers may be particularly vulnerable during the year-end shopping and travel season, when retail sales and promotions peak in November and December.

CFPB finds some credit card companies may be engaging in illegal activity bait and switch by offering plans Incentive program Attract consumers to sign up for credit cards, then let the points depreciate in value air miles Earned.

“When a credit card issuer promises cash back Bonuses or free round-trip flights, they should actually offer that,” Chopra said.

The CFPB also warned store credit card You may be charged a much higher interest rate than a traditional credit card.

Companies make promises of points and rewards but fail to deliver

More than 90% of credit disbursement has been used rewards credit card Since 2019, the CFPB said. Encourage consumers to use rewards cards and promise Sign up bonus These include cash, points and miles, in addition to rewards for certain types of spending.

However, consumers reported that their credit card companies had reduced the value of the rewards they were entitled to, “similar to a bait-and-switch scheme,” the CFPB said.

Credit card companies may also void rewards earned by customers by illegally hiding fine print disclaimers or vague contract terms. In 2023, CFPB ordered Bank of America to repay $100 million to customers, In 2012, American Express ordered it to repay $85 million.

Under federal law, credit card companies Incentive program Customers must be guaranteed to be able to claim their rewards, even if a system glitch prevents consumers from redeeming their rewards.

This is the CFPB’s second warning about credit card rewards programs. in May, The bureau held a hearing Worked with the U.S. Department of Transportation and released a report outlining a range of issues faced by consumers.