Some credit card companies operating rewards programs may be violating the law by failing to provide promised rewards, the CFPB said, in a circular to law enforcement agencies.

“When credit card issuers promise cashback bonuses or free round-trip airfares, they should actually deliver them,” CFPB Director Rohit Chopra said, in issuing the circular. “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.”

The CFPB said that credit card issuers often promise cash, points, and miles, sign-up bonuses to consumers, as well as rewards for certain types of spending. Consumers have reported to the CFPB that these rewards can be difficult to redeem or sometimes are devalued by policy changes made by partners.

In addition to the circular, the CFPB also released new research on retail credit cards and a new tool that consumers may use to compare credit cards.

The circular warns that companies may violate federal law when they:

  • Devalue earned rewards. Consumers make decisions about whether to open or use a credit card based on the value of card benefits and rewards offered through advertising, according to the CFPB. If the company later deflates the value of a customer’s accrued awards, it may be an unfair or deceptive practice, similar to a bait-and-switch scheme.
  • Hide the conditions for earning or keeping rewards. Disclaimers in fine print buried in a contract may unlawfully conflict with prominent promotional language advertising the rewards consumers may earn. Companies also may illegally rely on fine print to cancel valuable rewards that consumers already have earned. If a consumer’s receipt of rewards is revoked, canceled, or prevented based on buried or vague conditions, that may be an unfair or deceptive act or practice, the bureau warned.
  • Fail to deliver promised benefits. Companies that operate rewards programs are responsible for ensuring that consumers can redeem the rewards they have earned, including by coordinating with merchant partners and vendors. If system failures result in consumers losing points when they attempt to redeem them, it may be considered an unfair or deceptive practice.

In addition to the circular, the CFPB published new research showing that retail cards are more expensive than general-purpose cards. The bureau said that 90% of retail cards reported a maximum annual percentage rate above 30%, compared with 38% of non-retail, general-purpose cards. In December 2024, private label cards for top retailers had an average APR of 32.66% for new accounts, according to the bureau.

The CFPB also reported that:

  • Use of less restrictive underwriting can put consumers at a higher risk of a debt they cannot afford. Private label store cardholders are more likely to carry a balance and are more likely to make the minimum payment than consumers with general purpose cards.
  • Half of retail card applications are submitted at the point of sale. Consumers reported experiencing aggressive sales tactics and an inability to redeem promotions.
  • Consumers said they were confused about the products they signed up for. Some consumers report receiving credit cards when they believed they were registering for a free loyalty program. Consumers also said they received a different card than the one they applied for. Other consumers said they had been signed up for add-on insurance products they did not request.

In addition, ostensibly to allow people to “make apples-to-apples” comparisons about options in the credit card market, the CFPB has launched Explore Credit Cards, a tool using open data. The CFPB claims its new tool provides unbiased, comprehensive data for more than 500 cards.

“The tool addresses a lack of price competition in the credit card market: despite significant rate differences between issuers serving similar customers, people cannot easily compare interest rates before applying,” the CFPB said. “By enabling consumers to explore cards based on credit score range, interest rates, fees, and rewards offerings, the tool also affords consumers with a higher degree of certainty when searching for cards for their situation.”

The bureau claims the data and tool will promote more competition in the credit card market and allow smaller providers and companies with better offers a chance to compete.

By law, the 25 largest issuers of credit cards and 125 selected by the CFPB as a representative sample of issuers are required to submit data to the CFPB. Additional issuers may voluntarily contribute their data. “The CFPB invites voluntary data submissions, particularly from smaller issuers, so they have a chance to promote their credit products in a market typically dominated by pay-for-play,” the bureau said.