US regulators investigate credit card rewards schemes for 'bait and switch'

Federal officials announced on Thursday that they are currently investigating "bait and switch" schemes associated with credit card rewards and travel programs. The Consumer Financial Protection Bureau (CFPB) stated that they have analyzed "several hundred consumer complaints" related to the administration of credit card rewards programs and have identified four recurring issues.

According to CFPB Director Rohit Chopra, credit card companies often promise upfront benefits for signing up and using their rewards card but bury complex terms in the fine print for using the rewards. Customers have reported that requirements detailed in the fine print of rewards programs’ terms and conditions do not match marketing materials, turning sign-up offers or other promotional rewards into a 'bait and switch.'

In addition, customers have also complained that issuers and merchant partners have devalued rewards that customers already earned by either increasing the number of points or miles needed for redemption. The CFPB mentioned that credit card companies often use rewards programs as a "bait and switch" tactic by burying terms in vague language or fine print and changing the value of rewards after people sign up and earn them.

The CFPB is currently investigating ways to protect consumers' points, stop bait-and-switch scams, and promote a fair and competitive market for credit card rewards. The agency has already taken action against issuers like American Express and Bank of America for "engaging in unfair, deceptive, or abusive acts or practices related to rewards programs."


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