The Consumer Financial Protection Bureau (CFPB) says they are seeing a rise in consumer complaints associated with credit card rewards programs.
“The rewards are often devalued or denied even after program terms are met,” the CFPB stated.
Many of these credit card companies highlight their rewards programs, promising cash back and travel incentives rather than talking about low interest rates and fees.
Customers of card companies with revolving balances will pay more interest and fees than they will receive back on their rewards program. The CFPB says the process is tantamount to “bait and switch.”
The CFPB alleges that many credit card customers are unaware of the terms and conditions because the fine print is buried and described with vague language. The company then changes the rewards portion after a customer signs up.
Consumer groups report that credit card reward programs have become more complicated, primarily with credit cards that charge higher annual fees. To avoid that, credit companies lure a person to become more intrigued by signing up for hotel points or airline miles where they could receive top-of-the-line perks.
“We have analyzed over several hundred consumer complaints” that are related to the administration of credit card rewards programs,” said the CFPB.
Two companies the CFPB has “taken action” against are Bank of America and American Express.
CFPB said these two were engaging in unfair, deceptive, or abusive acts or practices related to rewards programs.
CFPB listed several complaints they found where the companies misled consumers.
There were recurring issues that resulted in consumers either not receiving the rewards they were promised, facing unexpected promotional conditions, seeing a devaluation in their points, having redemption problems, or even revocation.
Items detailed in the fine print of rewards programs’ terms and conditions do not match marketing materials, which turns “sign-up offers or other promotional rewards into a ‘bait and switch.’ Issuers and merchant partners depreciated customers’ rewards programs by increasing the points or miles needed for redemption.
