Dec. 18 (UPI) — The Consumer Financial Protection Bureau Wednesday warned law enforcement agencies that some credit card companies are allegedly illegally devaluing rewards points and airline miles.
In a statement, the CFPB said that too often large credit card issuers play “a shell game to lure people into high-cost cards, boosting their own profits while denying consumers the rewards they’ve earned.”
The agency announced what it said were major actions Wednesday to protect consumers from illegal credit card practices and to help save money yon interest and fees.
“When credit card issuers promise cash-back bonuses or free round-trip airfares, they should actually deliver them. The CFPB is taking aim at bait-and-switch tactics and promoting more competition in credit card markets to protect consumers and give people more choice,” CFPB Director Rohit Chopra said in a statement.
The circular to law enforcement agencies CFPB warned of specific violations of federal law. Consumer Financial Protection circulars are issued to all parties with authority to enforce federal consumer financial law.
They include devaluing earned rewards, hiding the conditions for earning or keeping rewards and failure to deliver promised benefits.
“Rewards program operators may commit an unfair or deceptive act or practice when they materially reduce the overall value of rewards that consumers have already earned or purchased, The CFPB circular said.
The same holds true, according to the CFPB, when rewards are canceled or revoked based on “buried or vague conditions.”
When rewards customers lose their points because redemption procedures don’t function properly, that could also be illegal, according to the CFPB.
The CFPB Wednesday also launched a tool called Explore Credit Cards that is said will help people make apples-to-apples comparisons about credit card options when choosing cards.
“Unlike existing comparison sites that may feature a limited selection of cards with high annual fees and APRs, rely on kickback schemes, and accept money to promote cards, the CFPB’s new tool provides unbiased, comprehensive data for more than 500 cards, and the data is available to everyone,” the CFPB said in a statement.