According to a Bloomberg report by Carter Dougherty, Director Cordray confirmed last week that the CFPB will be looking at credit card rewards programs. Director Cordray is reported to have indicated that the CFPB will be focusing on rewards program disclosures and considering the need for additional protections.
The Bloomberg report also indicated that, according to an individual at the CFPB involved in the project, the CFPB’s interest in rewards programs was not triggered by consumer complaints, as complaints related to such programs represent only a small percentage of total credit card complaints received by the CFPB. This individual is reported to have stated that the CFPB’s interest stems from the view that rewards programs are the primary influence on a consumer’s decision to obtain a particular credit card.
Director Cordray’s statement is consistent with the report the CFPB issued last month on the impact of the CARD Act. In that report, the CFPB highlighted credit card rewards programs as an “area of concern” that “may pose risk to consumers and that will warrant further scrutiny by the Bureau.” The CFPB questioned whether specific actions required to earn rewards and formulas for computing rewards are adequately disclosed and raised concerns about the complexity of program terms involving the value of reward points and redemption and forfeiture rules.