Maryland Legal Alert for Financial Services

In a recent industry release, the Consumer Financial Protection Bureau (CFPB) compiled and analyzed consumer complaints received in 2023 regarding credit card reward programs. The CFPB release identified four prevalent issues that consumers consistently raised:

• Vague or Hidden Promotional Conditions: Consumers reported discrepancies between promotional materials and the terms and conditions of the reward offers. This has led to consumer frustration concerning alleged "bait and switch" tactics.
•  Devalued Rewards: Consumers also complained about the decreased value of rewards caused by factors such as inflation, increased mileage or point requirements, and other changes affecting redemption.
• Customer Service Issues Interfering with Reward Redemption: There were also complaints concerning customer service issues and technical glitches disrupting the redemption process, particularly in collaborative third-party merchant reward programs.
• Unilateral Revocation of Reward Points: Consumers also raised concerns about the inability to receive reward points when closing accounts and the lack of effective communication from credit card issuers regarding the expiration of certain reward programs.

The CFPB has previously taken significant action against credit card issuers for unfair or deceptive practices in administering reward programs, emphasizing that such practices violate the Consumer Financial Protection Act (CFPA). The latest CFPB release highlights the need for credit card issuers to ensure that their reward programs comply with the CFPA.

Practice Pointer: Credit card issuers are urged to thoroughly review their reward program structures, disclosures, and agreements with third-party merchant partners, and to proactively address reward-related complaints to ensure compliance with the CFPA.

For more information, contact Christopher R. Rahl or Tamia J. Morris.

Contact Christopher R. Rahl | 410-576-4222

Contact Tamia J. Morris | 410-576-4021