Credit Card Rewards Issue Spotlight

CONSUMER FINANCIAL PROTECTION BUREAU | MAY 2024

Credit Card Rewards

Issue Spotlight

1 CONSUMER FINANCIAL PROTECTION BUREAU

Table of contents

Table of contents......................................................................................................... 1

Executive Summary .................................................................................................... 2

1. Background ........................................................................................................... 4

1.1 Consumer Salience ................................................................................... 4

1.2 Complexity ................................................................................................ 6

1.3 Cost ........................................................................................................... 8

2. Complaint Themes .............................................................................................. 12

2.1 Unexpected Promotional Conditions ..................................................... 12

2.2 Devaluation ..............................................................................................15

2.3 Redemption Problems ............................................................................. 17

2.4 Revocation .............................................................................................. 20

3. Conclusion .......................................................................................................... 23

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Executive Summary

Rewards programs that promise consumers financial incentives for spending are a central

feature of most consumer credit cards and dominate many issuers’ marketing efforts. The role of

rewards in the industry has grown substantially, as rewards programs have become increasingly

expensive for issuers and important to consumers.

In 2023, the CFPB received over 1,200 complaints involving credit card rewards, a more than 70

percent increase over pre-pandemic levels.

Some of these complaints reflect perennial issues

involving the administration of credit card rewards, such as consumers claiming credit card

companies denied them benefits after they met program requirements.

Others suggest that new

problems have been created by the growth of co-brand credit cards and rewards programs where

consumers can transfer miles or points to merchants. Issuers are primarily responsible for the

offering and administration of credit card rewards programs, but consumer complaints

emphasize that credit card companies often claim there is little they can do about their own

policies, technical systems, and partnership agreements. Prior CFPB research has shown that,

for many borrowers, the benefits of rewards programs fail to exceed the costs of credit cards.

Given this, it is important to better understand how credit card rewards programs directly affect

consumers.

For this Issue Spotlight, we analyzed several hundred consumer complaints relating to the

administration of credit card rewards programs and identified four recurring themes that

resulted in consumers not receiving the rewards they were promised:

1) Consumers fail to receive promotional rewards when financial institutions

impose vague or hidden conditions: Consumers indicate 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.”

See, e.g., CFPB, Consumer Complaint Database, (last accessed Mar. 18, 2024). These totals do not include rewards-

related issues that consumers may raise in other issue categories (for example, issues with sign-up bonuses

categorized as a problem with promotional offers, more generally).

CFPB, Consumer Response Annual Report (Mar. 2018) at 25,

https://files.consumerfinance.gov/f/documents/cfpb_consumer-response-annual-report_2017.pdf

;

CFPB, Consumer Response Annual Report (Mar. 2019) at 39,

https://files.consumerfinance.gov/f/documents/cfpb_consumer-response-annual-report_2018.pdf;

CFPB, Consumer Response Annual Report (Mar. 2020) at 34,

https://files.consumerfinance.gov/f/documents/cfpb_consumer-response-annual-report_2019.pdf.

CFPB, The Consumer Credit Card Market (Oct. 2023) (2023 Report) at 68,

https://files.consumerfinance.gov/f/documents/cfpb_consumer-credit-card-market-report_2023.pdf

3 CONSUMER FINANCIAL PROTECTION BUREAU

2) Consumers lose benefits that they previously earned when issuers and

merchants devalue rewards: Consumers state that issuers and merchants reduce the

value of rewards already earned by increasing the number of points or miles needed for a

redemption. They also say that card issuers do not protect customers from co-brand

partner decisions to remove benefits from merchant “loyalty” programs or change

requirements for achieving status.

3) Consumers face obstacles in receiving their preferred redemptions when

companies fail to quickly resolve rewards-related issues: Consumers describe

customer service issues and technical glitches that block or delay their redemptions,

often by preventing the transfer of rewards to a third-party merchant. They also

complain that issuers redirect cardholders to merchants and fail to reinstate rewards

when cardholders are unable to redeem them through no fault of their own.

4) Consumers suddenly lose rewards when issuers unilaterally revoke

previously earned balances: Consumers indicate that their points, cash back, and

miles vanish when an account closes. They also describe financial institutions revoking

rewards on open accounts through expiration policies, often without prior

communication.

Federal consumer protection laws, including the Consumer Financial Protection Act’s

prohibition against unfair, deceptive, or abusive acts or practices, apply to rewards programs

offered in connection with consumer financial products or services. The CFPB has taken prior

actions against credit card issuers that engaged in unfair, deceptive, or abusive acts or practices

related to rewards

The CFPB will continue to monitor credit card rewards programs and work

together with government partners to take necessary action on these issues as appropriate.

CFPB, CFPB Orders American Express to Pay $85 Million Refund to Consumers Harmed by Illegal Credit Card

Practices (Oct. 1, 2012),

https://www.consumerfinance.gov/about-us/newsroom/cfpb-orders-american-express-to-

pay-85-million-refund-to-consumers-harmed-by-illegal-credit-card-practices/; CFPB, CFPB Takes Action Against

Bank of America for Illegally Charging Junk Fees, Withholding Credit Card Rewards, and Opening Fake Accounts

(July 11, 2023), https://www.consumerfinance.gov/about-u

s/newsroom/bank-of-america-for-illegally-charging-

junk-fees-withholding-credit-card-rewards-opening-fake-accounts/.

For prior CFPB publications related to monitoring credit card rewards programs, see, e.g., CFPB, Card Act Report

(Oct. 1, 2013) (2013 Report) at 82, https://files.consumerfinance.gov/f/201309_cfpb_card-act-report.pdf

;

CFPB, The Consumer Credit Card Market (Dec. 2015) (2015 Report) at 230,

http://files.consumerfinance.gov/f/201512_cfpb_report-the-consumer-credit-card-market.pdf;

CFPB, The Consumer Credit Card Market (Dec. 2017) (2017 Report) at 59,

https://files.consumerfinance.gov/f/documents/cfpb_consumer-credit-card-market-report_2017.pdf;

CFPB, The Consumer Credit Card Market (Aug. 2019) (2019 Report) at 99,

https://files.consumerfinance.gov/f/documents/cfpb_consumer-credit-card-market-report_2019.pdf;

CFPB, The Consumer Credit Card Market (Sep. 2021) (2021 Report) at 87,

https://files.consumerfinance.gov/f/documents/cfpb_consumer-credit-card-market-report_2021.pdf;

2023 Report, supra note 3, at 98.

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1. Background

Credit card rewards programs are a common type of consumer incentive that encourage

applications for and the continued use of a particular credit card product.

Programs that are

classified as rewards typically have common units of value that are awarded according to a pre-

determined formula, or “earn rate” based primarily on purchase volume, and can be

accumulated over time to be later redeemed for cash, goods, or services.

The offering of rewards

is a feature added on to credit cards and is not necessary for the underlying extension of credit

or the processing of transactions and payments – indeed, not all credit cards have a rewards

component.

1.1 Consumer Salience

Rewards play a substantial role in consumer credit card shopping and use.

As dominant credit

card issuers increasingly market credit card products based on rewards, rewards programs

distort the true costs of credit cards, create a barrier to entry for would-be competitors, and

make it harder for smaller issuers with often lower pricing to compete with sizeable rewards

offerings by the largest banks.

CONSUMER DECISION MAKING

Rewards frequently influence credit card applications, as consumers report that rewards and

sign-up offers are top factors influencing their shopping decisions.

Issuers also promote reward

features more prominently than other terms in marketing material: in one study, rewards were

displayed on the front page of a sample of credit card offers over 94 percent of the time, more

often than annual fees (78 percent), APRs (28 percent), and late fees (6 percent).

After a

consumer chooses to open a card, rewards continue to play a major role, often determining card

Reference in this report to any specific commercial product, service, firm, or corporation name is for the

information and convenience of the public and does not constitute endorsement or recommendation by the CFPB.

This report focuses on credit card rewards offered on general purpose cards that can be used at a variety of

merchants, but rewards programs may also be offered in connection with other consumer financial products or

services.

2015 Report, supra note 5, at 209.

Infra note 9.

2023 Report, supra note 3, at 98.

Hong Ru & Antoinette Schoar, Do Credit Card Companies Screen for Behavioural Biases?, at 14 (Feb. 21, 2023),

BIS Working Paper No. 842, https://ssrn.com/abstract=3549532

5 CONSUMER FINANCIAL PROTECTION BUREAU

choice at point-of-sale.

However, rewards programs may decrease competition on price by

raising switching costs for consumers.

Additionally, the authors of one Federal Reserve

working paper found that cardholders with near-prime and subprime scores typically pay more

in interest and fees on a rewards card than a card without rewards, even after accounting for the

value of earned rewards.

Finally, consumers with revolving debts on average pay far more in

interest and fees than they get back in rewards: CFPB research has found that cardholders who

revolve debt from one cycle to the next pay 94 percent of total interest and fees, but gain less

than 30 percent of rewards benefits.

BARRIERS TO COMPETITION

The upfront cost of offering sign-up bonuses and high earning rates may create a barrier to entry

for smaller companies. With a drop in credit card debt during the pandemic, major credit card

companies turned to increased rewards earning rates and record sign-up bonuses to incentivize

applications and grow balances.

The largest issuers spent increasingly more money on

attracting consumers with rewards and marketing those products to prospective cardholders.

While most credit card products offered by a sample of smaller issuers still provided cardholders

with the opportunity to earn and redeem rewards,

the upfront cost of many larger issuers’

rewards offers may be more difficult to match.

Few (if any) of these products with smaller

issuers offered consumers the ability to earn and redeem rewards with major merchants like

hotels or airlines.

A relatively small number of multi-year partnerships between larger issuers

and specific major merchants limit the product options for consumers seeking to redeem

Id.

Natasha Sarin, The Salience Theory of Consumer Financial Regulation, at 34 to 35 (Oct. 2018),

https://scholarship.law.upenn.edu/faculty_scholarship/2010/

Sumit Agarwal, et. al., Who Pays For Your Rewards? Redistribution in the Credit Card Market (Jan. 2023),

https://www.federalreserve.gov/econres/feds/who-pays-for-your-rewards-redistribution-in-the-credit-card-

market.htm.

2023 Report, supra note 3, at 48 to 49.

2023 Report, supra note 3, at 98.

In 2022, six of the biggest issuers reported spending more than 40 percent more on rewards than in 2019. Telis

Demos, Credit Card Rewards Are Heading Toward a Crisis, Wall Street Journal (Apr. 2023),

https://www.wsj.com/articles/the-pandemic-didnt-end-card-rewards-it-made-them-stronger-20fd03c9.

CFPB, Terms of Credit Card Plans Data (Jan. 1 to June 30, 2023), https://www.consumerfinance.gov/data-

research/credit-card-data/terms-credit-card-plans-survey/.

Lindsey Suter, Comment CFPB-2023-0009-2862, Community Financial Credit Union (Apr. 19, 2023),

https://www.regulations.gov/comment/CFPB-2023-0009-2862

Id. For examples of airline and hotel credit cards offered in partnership with the largest issuers, see e.g., Benji

Stawski and Alexandria White, Get free breakfast, room upgrades and more with the best hotel credit cards, CNBC

(Mar. 21, 2024), https://www.cnbc.com/select/best-hotel-credit-cards/

; see also, Bob Haegele, Best airline credit

cards in 2024, AP Buyline (Mar. 20, 2024), https://apnews.com/buyline-personal-finance/article/best-airline-

credit-cards.

6 CONSUMER FINANCIAL PROTECTION BUREAU

rewards in a particular currency,

potentially providing those few companies with market power

to adjust other terms.

Smaller banks and credit unions have struggled to gain market share

against larger issuers that dominate the market – rewards programs may help explain some of

this discrepancy.

1.2 Complexity

Credit card rewards programs are increasingly complex, as issuers have introduced both

additional incentives beyond rewards earned as a flat-rate of total spending and the possibility

of redemption through a greater number of channels. More credit card issuers award

proprietary rewards currencies, such as “points,” that can be used for a wider variety of

redemptions. The value of rewards currencies is set by the credit card issuer or merchant

partner and can often fluctuate. Since at least 2019, an increasing share of rewards value has

been awarded through promotional bonuses, increased earning rates on rotating merchant

categories, or statement credits with complicated terms. Especially for credit cards with high

annual fees, a key part of the value proposition comes from affiliated benefits like access to

exclusive events or locations and status that affords premium service or additional perks.

THE RISE OF POINTS

Credit card issuers generally began offering rewards programs in the 1980s.

Forty years later,

approximately three-in-four general purpose credit card accounts are now rewards cards.

The

While an airline or hotel rewards program may have multiple partners across various industries, they typically only

have one domestic credit card issuer as a partner with whom they may have established an exclusive arrangement.

See, e.g., Press Release: American Express and Delta Renew Industry-Leading Partnership, Lay Foundation to

Continue Innovating Customer Benefits (Apr. 2, 2019),

https://www.businesswire.com/news/home/20190402005631/en/American-Express-and-Delta-Renew-Industry-

Leading-Partnership-Lay-Foundation-to-Continue-Innovating-Customer-Benefits; see also, Press Release: American

Airlines, Citi, Barclaycard US, and MasterCard Announce New Credit Card Agreements (July 12, 2016),

https://americanairlines.gcs-w

eb.com/news-releases/news-release-details/american-airlines-citi-barclaycard-us-

and-mastercard-announce; see also, Press Release: American Express and Hilton Announce New Hilton Honors Co-

Branded Credit Cards (Nov. 1, 2017), https://www.businesswire.com/news/home/20171101005899/en/American-

Express-and-Hilton-Announce-New-Hilton-Honors-Co-Branded-Credit-Cards.

CFPB, Credit card data: Small issuers offer lower rates (Feb. 16, 2024), https://www.consumerfinance.gov/data-

research/research-reports/credit-card-data-small-issuers-offer-lower-rates/.

Diners Club International, Diners Club History, https://www.dinersclub.com/about-us/history/ (last accessed

Feb. 14, 2024). Peter Greenberg, Fearless Traveler: The New Travel Credit Cards, The Washington Post (Aug. 31,

1985), https://www.washingtonpost.com/archive/lifestyle/travel/1985/09/01/fearless-t

raveler/456c2846-9255-

4c33-a52d-25c5c06de9ee/; ABC News, Airline Frequent Flyer Miles, 30 Years Later (May 16, 2011),

https://abcnews.go.com/Travel/airline-frequent-flyer-miles-30-years/story?id=13616082.

2023 Report, supra note 3, at 99.

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share of consumer spending on cash back and points cards has generally increased since at least

2017,

and about half of rewards earned are on points-based and other similar products.

There are three primary types of rewards: cash back,

miles,

and points.

Cash back

redemptions are relatively simple: consumers earn back a portion of their spending as a

statement credit, deposit, or other cash equivalent with an explicit dollar value. Miles earned on

a co-brand credit card go directly to the linked loyalty account and can be used for award flights

or other services like upgrades, meals, or bags at a rate set by the airline. Points can often be

used as cash back or turned into miles with transfer partners, but a consumer can also use

points to buy merchandise, get a gift card, book travel through an issuer-branded portal, donate

to charity, fund a college savings plan, apply to a purchase at check out, use towards a down

payment, or even invest in the stock market or cryptocurrencies.

The value of a point can vary

by redemption option, but it is typically estimated by major issuers to be worth about $0.01.

PROMOTIONAL REWARDS

Consumers increasingly receive promotional rewards beyond those earned as a flat-rate of total

periodic spending. The most common are sign-up bonuses, or lump-sum incentives that issuers

offer to consumers who meet a certain level of spending within a set number of months upon

opening the card. These introductory promotions existed even for some of the first rewards

cards,

but their value and prevalence have dramatically climbed since at least 2019.

Now,

almost one-in-ten dollars earned in rewards overall, and closer to one-in-five for consumers

with below-prime scores, are associated with sign-up bonuses.

Cardholders might also receive

lump-sum bonuses for referrals, cardholding “anniversaries,” or via retention offers.

Promotions are not limited to one-time bonuses. Issuers offer elevated earn rates or “category

accelerators” (e.g., five points per dollar spent rather than one) for certain subsets of merchants,

2021 Report, supra note 5, at 88 and 89.

2023 Report, supra note 3, at 70.

With cash back rewards, cardholders earn rewards with an explicit dollar value that can be redeemed for statement

credits, checks, deposits to an account, or cash.

With miles cards, cardholders earn airline-branded rewards with spending on cards.

With points cards, cardholders earn proprietary rewards currencies through non-cashback issuer-managed

programs, as well as through programs managed by third parties that are not airlines, such as hotel chains.

2023 Report, supra note 3, at 105.

2023 Report, supra note 3, at 70.

Fearless Traveler, supra note 8.

2023 Report, supra note 3, at 104.

Id.

8 CONSUMER FINANCIAL PROTECTION BUREAU

often on a temporary or rotating basis.

Financial institutions also sometimes issue statement

credits for particular purchases like hotel bookings or payments to a ride sharing service.

However, for many of these promotions, consumers need to be aware of the benefit and

manually enroll by contacting the issuer via the designated channel. A similarly situated

consumer who does not opt-in would not receive rewards on an otherwise eligible transaction.

AFFILIATED BENEFITS

Major issuers continue to introduce additional benefits that provide exclusive access to events,

products, or services under the larger umbrella of rewards and merchant loyalty programs. With

the return of travel and entertainment spending in 2021 and 2022, consumer demand for

experiences like concerts, airport lounges, and restaurants was high.

Issuers are increasingly

limiting access to such benefits to preserve exclusivity.

In addition, airlines and other

merchant partners have announced changes to loyalty programs associated with co-brand cards

to restrict access or increase requirements for achieving preferred status.

1.3 Cost

Major credit card companies’ costs to provide credit card rewards have grown both overall and a

share of purchase volume. Some issuers are paying merchant partners billions of dollars each

year under partnership agreements for co-brand credit cards, largely to gain access to their

customer base and proprietary loyalty programs.

Issuers sometimes vary in how they define which merchants are included in a given category, like “travel” or

“groceries,” potentially excluding particular merchants or setting narrow restrictions on valid purchases.

Alexandria White, What is a statement credit and how can you take advantage of it?, CNBC (Oct. 29, 2020),

https://cnbc.com/select/what-is-a-statement-credit/

. See, e.g., Trina Paul, Capital One is offering select cardholders

10% back on Uber purchases and a free Uber One membership, CNBC (Mar. 14, 2024),

https://www.cnbc.com/select/capital-one-uber-partnership/.

2015 report, supra note 5, at 233.

2023 report, supra note 3, at 106.

Jason Stauffer, American Express cuts Delta lounge access benefits from flagship cards — should you re-evaluate

your credit card strategy?, CNBC (Feb. 1, 2024), https://www.cnbc.com/select/amex-delta-lounge-access-changes/

;

Ryan Wilcox, Capital One to cut lounge access for Venture Rewards and Spark Miles cardholders, The Points Guy

(Dec. 13, 2023),

https://thepointsguy.com/news/capital-one-removes-lounge-access-venture-rewards-spark-miles/.

Emily McNutt, Delta is making it more expensive to earn elite status — here’s how you can bypass the new

requirements, CNN (Aug. 28, 2023),

https://www.cnn.com/cnn-underscored/travel/delta-airlines-status-

requirements-update; Sean Cudahy, Alaska Airlines raises lounge membership prices, tightens access, The Points

Guy (Nov. 9, 2023), https://thepointsguy.com/news/alaska-lounge-restrictions/; Zach Griff, Why United’s increased

status thresholds might not be as bad as they seem, The Points Guy (Nov. 11, 2022),

https://thepointsguy.com/news/united-premier-changes-not-so-bad/.

9 CONSUMER FINANCIAL PROTECTION BUREAU

COST OF PROVIDING REWARDS

Consumers earned more than $40 billion in rewards on major issuers’ general purpose credit

cards in 2022, increasing over 50 percent from 2019 levels.

Much of the increase in credit card

rewards costs is explained by greater consumer spending, as rewards expense is primarily a

function of purchase volume.

However, the average value of rewards earned has also grown

from 1.4 cents per dollar spent in 2019 to 1.6 cents in 2022, as issuers reported increased

rewards spending to incentivize applications and grow balances.

In the United States, rewards

are an expense for credit card issuers used to acquire and retain customers and to increase

spending. Major credit card companies often report interchange revenue net of rewards expense

in their periodic regulatory filings;

however, issuers may cover the cost through other revenue

channels, such as through annual fees or merchant-funded offers.

CO-BRAND PARTNER PAYMENTS

The costs of credit card rewards are more complicated for co-brand credit cards offered in

partnership with major airlines, hotels, and retailers.

In a co-brand relationship,

banks bid for

the right to leverage the brand recognition and loyalty program of a particular merchant to

promote spending on a credit card product that will later generate revenue. These multi-year

contracts are highly prized by a handful of large banks with the adequate scale, technological

knowledge, and financial resources to participate in a request for proposal.

Generally, co-

brand partners with extensive customer bases and significant market shares can negotiate

greater concessions from issuers and may wield considerable influence over product terms,

marketing commitments, and servicing standards. These relationships have proven to be

important to overall bank valuations.

In co-brand relationships, issuers often make large payments to merchants for rewards as well

as a number of other items, including (but not limited to) revenue sharing, origination bounties,

2023 report, supra note 3, at 69 to 70.

Spending increased 39 percent on general purpose cards from 2019 to 2022. 2023 Report, supra note 3, at 32.

2023 Report, supra note 3, at 71 and 98.

See, e.g., Capital One Financial Corporation, 2023 Form 10-K, at 57 (Feb. 22, 2024), https://ir-capitalone.gcs-

web.com/node/55906/html; see also, Discover Financial Services, 2023 Form 10-K, at 68 (Feb. 23, 2024),

https://d18rn0p25nwr6d.cloudfront.net/CIK-0001393612/f3103b18-c2f1-4357-aa14-331e3771515c.pdf.

“Co-brand” cards are a subset of general purpose products that include both the badge of a network and branding

of a specific merchant.

2023 Report, supra note 3, at 26.

For example, when American Express lost Costco as a co-brand partner, its stock fell 6.4 percent in one day. Robin

Seidel, AmEx-Costco Divorce Shakes Up Card Industry, Wall Street Journal (Feb. 12, 2015),

https://www.wsj.com/articles/american-express-to-lose-costco-exclusivity-1423746408.

10 CONSUMER FINANCIAL PROTECTION BUREAU

and benefits like baggage fees or free nights.

In many co-brand partnerships, an issuer

reserves the exclusive right to award points or miles for a particular merchant (such as an

airline).

After a co-brand contract is awarded, the issuer will typically buy rewards from the

co-brand partner (or its subsidiary) in bulk, providing the merchant with a consistent revenue

stream from its proprietary loyalty program.

Some major issuers also offer rewards programs

where cardholders can transfer issuer-branded rewards points to a merchant’s currency outside

of a co-brand relationship.

Once points or miles are awarded or transferred, the merchant then

typically controls the value of rewards at the point of redemption (for example, the number of

miles needed for a given flight or points for a hotel room) as well as the inventory available for

reward redemption.

During the COVID-19 pandemic, the importance of loyalty programs to many merchants

became uniquely apparent, as major airlines relied on the issuers of their co-brand credit cards

for loans and revenue through the sales of miles.

The share of revenue generated by loyalty

programs for the biggest U.S. airlines increased from 12 percent in 2019 to 16 percent two years

later, and the return on investment for frequent flyer programs was far higher than the profits

For their top co-brand partnerships, major banks made total net payments to merchant partners in excess of $28

billion in 2022, a 34 percent increase from 2019 levels. Payments to partners for rewards like points, miles, or other

discounts represent the vast majority of payments from issuers to merchants in co-brand relationships at 1.53 percent

of purchase volume associated with these large co-brand portfolios. 2023 Card Report, supra note 3, at 26.

One major issuer’s spokesperson said, “many of the large travel partners do have exclusivity with other banks and

other issuers,” when discussing the transfer partners on a new product.

https://viewfromthewing.com/points-

transfer-game-changer-5x-on-hotels-4x-on-flights-from-new-wells-fargo-card/

Issuers will also often pay the merchant for associated benefits for a given loyalty program like lounge access or free

checked bags.

At the time of this report writing, American Express, Capital One, J.P. Morgan Chase, Citibank, and Wells Fargo

offer credit cards that provide consumers the opportunity to transfer points to hotels and airline partnerships.

A review of reward seat availability for two major airlines by the Department of Transportation’s Office of Inspector

General in March 2015 found that 99 percent of round trip flights examined had award seats available, and 63 percent

were available at the carrier’s lowest award level, but only 13 percent of flights during a holiday week had award seats

available at the lowest redemption level. See, Office of Inspector General, Audit Report: Improvements Needed in

DOT’s Process for Identifying Unfair or Deceptive Practices in Airline Frequent Flyer Programs, Office of the

Secretary of Transportation, at 5 (Jun. 16, 2016), https://www.oig.dot.gov/library-item/33403

. See also, Jason

Steele, The Sneaky Ways Hotel Programs Can Restrict ‘Free’ Award Nights, The Points Guy (Nov. 19, 2019),

https://www.nerdwallet.com/article/travel/how-h

otel-loyalty-programs-promise-free-nights-and-what-they-

actually-deliver; see also, Delta Air Lines, SkyMiles Investor Presentation, at 17 (Sep. 14, 2020),

https://www.sec.gov/Archives/edgar/data/27904/000119312520244688/d27099dex991.htm.

Leslie Josephs and Amelia Lucas, Delta will use frequent-flyer program to back $6.5 billion in debt, CNBC (Sep.

2020),

https://www.cnbc.com/2020/09/14/delta-launches-6point5-billion-debt-deal-backed-by-its-frequent-flyer-

program.html#:~:text=Delta%20Air%20Lines%20said%20Monday,backed%20by%20its%20SkyMiles%20program;

Leslie Josephs, Airlines’ frequent flyer programs prove a lifeline even as travelers stay home in pandemic, CNBC

(Oct. 2020), https://www.cnbc.com/2020/10/14/airlines-f

requent-flyer-programs-prove-a-lifeline-even-as-

travelers-stay-homein-pandemic.html.

11 CONSUMER FINANCIAL PROTECTION BUREAU

on the core business of providing flights.

In 2023, some merchants reported increases in

loyalty-related revenue, also sharing expectations that this trend seemed poised to continue.

CHANGES TO REWARDS PROGRAMS

Given that rewards programs exist in large part to increase revenue, many credit card issuers

have tried to preserve the ability to alter rewards programs or devalue rewards as a safety valve,

putting consumers at a fundamental disadvantage. At the time of this report writing, many of

the largest credit card issuers reserved the right to change their rewards program at any time,

for any reason, and in many cases without notice in terms and conditions typically separate from

the cardholder agreements, in which changes to some terms are restricted and/or require prior

communication.

As a result, cardholders are responsible for repaying the costs of credit cards

under threat of legal action, yet issuers engage in unilateral modifications that deny consumers

the full value of promised benefits at will. In fact, forecasted earnings are often predicated on the

assumption consumers will not redeem the full value of their rewards over the life of the

account: some (but not all) companies discount the liability of outstanding rewards in their

financial statements by the redemption rate, or the share of rewards balances they expect to

ultimately be used.

If this rate declines when companies expand revocation policies or devalue

previously-earned points, miles, or cash back, companies benefit from the associated savings.

Rajesh Kumar Singh, U.S. airline loyalty programs can provide buffer from possible recession, Reuters (Apr. 4,

2023),

https://www.reuters.com/business/aerospace-defense/us-airline-loyalty-programs-can-provide-buffer-

possible-recession-2023-04-04/.

E.g., Delta, Q2 2023 Earnings Call (Jul. 13, 2023); IHG, Q4 2024 Earnings Call (Feb. 20, 2024); American

Airlines, 2024 Investor Day (Mar. 5, 2024).

See e.g., (among others), American Express, Membership Rewards Program Terms and Conditions,

https://rewards.americanexpress.com/myca/loyalty/us/catalog/tandc

(last accessed, Mar. 25, 2024); Citi, Citi

ThankYou Rewards Terms & Conditions, https://www.thankyou.com/cms/thankyou/tc.page?pageName=tc (last

accessed, Mar. 25, 2024); Chase, Chase Sapphire Preferred® with Ultimate Rewards® Program Agreement,

https://www.chase.com/sapphire/rewardsagreement (last accessed, Mar. 25, 2024); Wells Fargo, Wells Fargo

Rewards® Program Terms and Conditions and Addendum, https://consumercard.wellsfargorewards.com/#/tnc

(last accessed, Mar. 25, 2024).

Changes in some terms in credit card agreements, like increases in interest rates, are restricted by the Credit Card

Responsibility and Disclosure Act of 2009 (CARD Act), 15 U.S.C. 1637(i). See also, 1026.9(c)(2).

J.P. Morgan Chase, 2023 10-K: “The rewards liability is sensitive to redemption rate (“RR”) and cost per point

(“CPP”) assumptions. The RR assumption is used to estimate the number of points earned by customers that will be

redeemed over the life of the account.” American Express, 2023 10-K: “The Membership Rewards Ultimate

Redemption Rate (URR) for current program participants was 96 percent (rounded down) at both December 31, 2023

and 2022.” Southwest Airlines, 2022 Annual Report to Shareholders, “Under its current program, Southwest

estimates the portion of loyalty points that will not be redeemed. In estimating the breakage, the Company takes into

account the Member’s past behavior, as well as several factors related to the Member’s account that are expected to be

indicative of the likelihood of future point redemption. … For the year ended December 31, 2022, based on actual

redemptions of points sold to business partners and earned through flights, a hypothetical one percentage point

change in the estimated breakage rate would have resulted in a change to Passenger revenue of approximately $152

million (an increase in breakage would have resulted in an increase in revenue and a decrease in breakage would have

resulted in a decrease in revenue).”

12 CONSUMER FINANCIAL PROTECTION BUREAU

2. Complaint Themes

As noted above, we analyzed several hundred consumer complaints relating to the

administration of credit card rewards programs and identified four recurring themes:

unexpected promotional conditions, devaluation, redemption problems, and revocation.

2.1 Unexpected Promotional Conditions

A recurring issue is when rewards policies as reflected in account documents differ from

marketing materials, leading to consumers not getting what they claim was promised at the time

of application.

“BAIT-AND-SWITCH” OFFERS

Consumers described applying for a card based on a more rewarding offer but later receiving an

inferior promotion. Issuers promote credit cards through a number of different channels,

and

rewards cards may have different terms or sign-up bonuses depending on the application

method. One customer wrote, “They advertise in big bold letters everywhere [the larger

rewards offer]. Then somehow sneak the link [to the smaller rewards offer] in front of you.”

Another said,

“What made me go with this card is the specific promotion … Fast forward, I was denied

this benefit … I asked [customer service representative] if this situation reminds him of the

bait-and-switch tactics used by used cars salesmen.”

These channels include social media, digital advertising, and email in addition to traditional mail. For co-brand

cards, partners also integrate advertisements into the physical point of sale experience, digital check out process, and,

in the case of airline cards, in-flight announcements. Lewis Lazare, American Airlines flight attendants incentivized

to pitch credit cards, Chicago Business Journal (May 8, 2018),

https://www.bizjournals.com/chicago/news/2018/05/08/american-airlines-flight-attendants-incentivized.html

Consumer Complaint 5157496, https://www.consumerfinance.gov/data-research/consumer-

complaints/search/detail/5157496.

Consumer Complaint 5131675, https://www.consumerfinance.gov/data-research/consumer-

complaints/search/detail/5131675.

13 CONSUMER FINANCIAL PROTECTION BUREAU

The CFPB found in an enforcement action that one issuer, Bank of America, violated the law

when it offered sign-up bonuses only through online applications without clearly disclosing this

limitation in marketing materials.

SIGN-UP BONUS LIMITATIONS

Other consumers reported failing to receive a promotional offer due to hidden or vague

conditions.

For example, one common restriction is limiting the number of times a customer

can earn a sign-up bonus. Consumers described being sent targeted marketing, signing up for a

card, meeting the spending requirements, and only finding out months later they were never

eligible for the promotion in the first place.

One wrote, “I received a credit pull on my credit

history to open this account and it would be a shame if I opened the card for an offer I thought

I was eligible for but cannot get.”

Other consumers reported being left confused and frustrated about which purchases count

towards spending minimums for promotional bonuses. Typically, issuers do not consider cash

equivalents like gift cards to count towards a promotional spending minimum. One consumer

wrote she was unaware that gift cards were ineligible for meeting the spending minimum and

was only informed after the promotional period ended: “[Bank] took three months to inform me

about my eligibility to receive the bonus, thus squandering my opportunity to fulfill my

requirements.”

In the case of returns or disputes, banks will often reverse rewards earnings

and reduce the eligible spending towards the requirement. One consumer wrote,

“In order to get my reward points from them I needed to spend $1,000 within 90 days. I

quickly spent over $1,000. What I didn't realize was that a $20 return went against this

credit card. … The representative told me that I only had $990 on my account, but that my

90 days were not up, and I could make a purchase and get my points. I immediately made

a $10 charitable contribution. … Today, I was told I wouldn't get my bonus points.”

Bank of America, supra note 4.

In 2022, about one-in-four consumers eligible for a promotional bonus fail to meet the requirements to earn it.

2023 Report, supra note 3, at 104.

Consumer Complaint 2043780, https://www.consumerfinance.gov/data-research/consumer-

complaints/search/detail/2043780.

Consumer Complaint 2124042, https://www.consumerfinance.gov/data-research/consumer-

complaints/search/detail/2124042.

Consumer Complaint 2199230, https://www.consumerfinance.gov/data-research/consumer-

complaints/search/detail/2199230.

Consumer Complaint 2477202, https://www.consumerfinance.gov/data-research/consumer-

complaints/search/detail/2477202.

14 CONSUMER FINANCIAL PROTECTION BUREAU

“CHURNING” PROHIBITIONS

More broadly, some issuers have included catch-all language in their terms and conditions,

reserving the right to revoke an offer if the company determines account behavior matches

patterns of gaming or abuse that are generally referred to as “churning.”

“Churning” is where a

consumer repeatedly opens a card, meets the minimum spending requirement, receives an

introductory bonus, uses the rewards, and then cancels the product.

Issuers create policies that limit crediting rewards to consumers whose behavior matches

activity they deem as "gaming” or “abuse” to protect their average profitability per account;

however, this activity is rarely clearly defined.

Banks typically amortize the cost of up-front

promotional bonuses over a multi-year period, where the additional interchange, interest, and

fee revenue from a given account offset the initial rewards expense.

If a card is only opened to

earn that lump sum and then is immediately closed, the bank likely loses money on the

cardholder and would want to limit future expenses associated with that consumer. For

example, in one complaint, a consumer closed two accounts, first after finding an airline card

not useful and another in the case of impending devaluation. This consumer later found they

were denied a promotional offer after opening a new product.

In the case of at least one issuer, consumers reported being required to pay back previously

redeemed rewards value after they closed their account within a certain period of time.

One

consumer described cancelling a card that was not as useful as they had hoped and finding out

the consumer would need to pay back a previously earned promotional bonus:

“I had to call customer service to find out a requirement to keep the account open for 12

months in the mailing not anywhere in the glossy, colorful marketing letter and

accompanying application, but instead no doubt buried deep in the fine print …

E.g., Barclaycard, JetBlue Plus Mastercard Reward Rules,

https://static.barclaycardus.com/servicing/9c8e3bb4/img/jbe/rewardsTnC/JBE_GEN_REWRUL_WEB_BAR-

7979-5_FINAL.pdf (last accessed Feb. 14, 2024); American Express, Membership Rewards Program Terms and

Conditions, https://www.americanexpress.com/content/dam/amex/us/rewards/membership-rewards/mr-terms-

conditions-11.21.2023.pdf (last accessed Feb. 14, 2024).

Louis DeNicola, What is Credit Card Churning, Equifax (Oct. 28, 2023), https://www.experian.com/blogs/ask-

experian/what-is-credit-card-churning/. Online communities dedicated to optimizing rewards earning strategies

have membership into the hundreds of thousands. For one example of an online community dedicated to optimizing

credit card offers, see Reddit,

https://www.reddit.com/r/churning/ (last accessed Feb. 14, 2024).

See, supra note 66.

Berkeley Lovelace Jr., JPMorgan’s Dimon: I wish the Chase Sapphire Reserve card had cost us more money,

CNBC (Jan. 18, 2017),

https://www.cnbc.com/2017/01/18/jamie-dimon-i-wish-chase-sapphire-reserve-cost-

jpmorgan-more-money.html.

Consumer Complaint 3146674, https://www.consumerfinance.gov/data-research/consumer-

complaints/search/detail/3146674.

15 CONSUMER FINANCIAL PROTECTION BUREAU

They are hanging their hat on sketchy wording … How is the average consumer to conclude

from [‘if you cancel or downgrade your account within 12 months … we may take away

statement credit’], if he or she could find it in the first place, that ‘take away’ would be used

to justify rescinding a credit that had been issued and used more than a half-year

earlier?”

These “claw back” policies might discourage consumers from switching into cheaper products if

their situations change and could cause cardholders to incur a second annual fee if they want to

avoid paying back previously used rewards.

2.2 Devaluation

Consumers described a variety of problems involving the devaluation of their rewards.

REWARDS INFLATION

Issuers and merchant partners reduce the value of rewards by increasing the number of points

or miles needed for specific redemptions. An unexpected rewards devaluation can be a rude

awakening for consumers saving up based on the terms and conditions at account opening:

“Recently, I noticed that the miles required for a $100 gift card shot up [25%] … I have been

accruing these miles for years … I want the value of the miles that I have accrued in

relation to what I agreed to when I got the card.”

Travel providers have a long history of devaluing rewards by requiring more miles or points over

time for the same services.

Additionally, while miles and hotel points previously were usually

convertible according to a set award chart, many loyalty programs have moved to dynamic

pricing where it can be difficult to forecast the number of rewards needed for a flight or room.

Even when a consumer is using points on issuers’ branded travel booking portals rather than

Consumer Complaint 6214741, https://www.consumerfinance.gov/data-research/consumer-

complaints/search/detail/6214741.

Consumer Complaint 3321850, https://www.consumerfinance.gov/data-research/consumer-

complaints/search/detail/3321850.

Dan Reed, Airlines Are Under Heavy Pressure To Devalue Your Mileage Points, Forbes (May 19, 2021),

https://www.forbes.com/sites/danielreed/2021/05/19/airlines-frequent-flier-mileage-points/?sh=c47af2229b8f

;

The Economist, Frequent-flyer schemes provide airlines with a lifeline (Nov. 20, 2021),

https://www.economist.com/finance-a

nd-economics/2021/11/20/frequent-flyer-schemes-provide-airlines-with-a-

lifeline.

Ben Smithson, Dynamic airline award pricing is out of control — here are some ways to beat it, The Points Guy

(Aug. 8, 2023), https://thepointsguy.com/guide/beat-dynamic-airline-award-pricing/

16 CONSUMER FINANCIAL PROTECTION BUREAU

transferring them to a third party, there are reported cases where the number of rewards needed

to book a hotel or flight spiked after refreshing the page or starting a transaction.

OBSTACLES TO USE

Beyond explicit devaluation, issuers and merchant partners may erect barriers that make it

more difficult to redeem rewards for their full value. For products that have an explicit cash back

value, companies might impose minimum requirements for redemption.

One consumer who

wished to cancel her card after becoming dissatisfied with customer service became stuck in this

situation, “I asked her to send me a check of the remaining reward points (balance about $20)

… She refused to do that since a reward balance of less than $25 cannot be given.”

In another

case, rewards changed from cash back through statement credits or direct deposit to merchant

credits that limited consumers’ options for using a so-called cash equivalent.

In previous CFPB

focus groups, consumers have stated that they find the redemption process more complex,

opaque, or time-consuming than they had assumed.

In other words, the additional difficulty

reduced the perceived value of rewards to a given consumer.

BENEFIT MODIFICATIONS

One particular pain point for consumers occurs when issuers do not protect customers from the

consequences of co-brand partner decisions that decrease a product’s utility. For example, one

consumer reported that, when they cancelled their card after program modifications, the bank

did not honor their request to refund or prorate their annual fee.

The consumer stated:

“I've had this credit card for many years. [Airline] and [Bank] advertised and encouraged

the use of this card for earning miles [and status]. … [Airline and Bank] announced

changes to the [frequent flyer] program that basically rendered this card useless and a

waste of money for the annual fee.

I immediately called [Bank] to cancel my card which they did, however, they refused to

refund the annual fee … They fraudulently and misleadingly allowed people like me to

renew the card for benefits that would no longer be available in the future.”

Consumer Complaint 6375720, https://www.consumerfinance.gov/data-research/consumer-

complaints/search/detail/6375720.

Consumer Complaint 2883004, https://www.consumerfinance.gov/data-research/consumer-

complaints/search/detail/2883004.

Consumer Complaint 3650259, https://www.consumerfinance.gov/data-research/consumer-

complaints/search/detail/3650259.

2015 Report, supra note 5, at 234.

Consumer Complaint 7592224, https://www.consumerfinance.gov/data-research/consumer-

complaints/search/detail/7592224.

17 CONSUMER FINANCIAL PROTECTION BUREAU

Consumers also complained about banks removing core benefits from reward programs with

little notice.

In one complaint, a consumer wrote, “[Bank] recently cancelled the free night

award bonus which was a benefit of their [Hotel] credit card. … I feel I was misled by [Bank]

as they advertised [this benefit] at the time I renewed my membership.”

2.3 Redemption Problems

Consumers reported a variety of issues with redemptions due to customer service or technology

problems.

CUSTOMER SERVICE ISSUES

Consumers described customer service that was unhelpful and unable to quickly resolve rewards

problems. One consumer described refereeing a three-way call between two bank departments

with conflicting policies;

another said they reached out to the issuer “over 50 times.”

Consumers ended up in customer service limbo despite their repeated calls, hours on hold, and

thorough documentation of the problem at hand. One consumer wrote,

“I called to investigate, and nobody would give me any information despite my repeated

attempts. The only information they could provide was 'my account was locked by

corporate,' 'they do not know why,' 'it is impossible for me to speak with anyone in

corporate,' and 'I should expect to hear more in 6 to 8 weeks or longer when the

investigation is complete.' This is crazy.”

Some frustrated consumers also described being informed it could take upwards of two to three

months to fix a given problem.

Others failed to receive any estimate of the time needed to

resolve an issue.

For those provided a clear window for resolution, consumers described

Consumer Complaint 1351254, https://www.consumerfinance.gov/data-research/consumer-

complaints/search/detail/1351254.

Consumer Complaint 6920840, https://www.consumerfinance.gov/data-research/consumer-

complaints/search/detail/6920840.

Consumer Complaint 6757489, https://www.consumerfinance.gov/data-research/consumer-

complaints/search/detail/6757489.

Consumer Complaint 3440540, https://www.consumerfinance.gov/data-research/consumer-

complaints/search/detail/3440540.

Consumer Complaint 5030955, https://www.consumerfinance.gov/data-research/consumer-

complaints/search/detail/5030955; Consumer Complaint 3205547, https://www.consumerfinance.gov/data-

research/consumer-complaints/search/detail/3205547.

Consumer Complaint 6681148, https://www.consumerfinance.gov/data-research/consumer-

complaints/search/detail/6681148.

18 CONSUMER FINANCIAL PROTECTION BUREAU

problems stretching on far beyond the estimate or even longer than indicated in the contractual

language found in rewards agreements.

Moreover, it may be the case that the submitters of the

complaints included here represent the most persistent consumers. Others presumably give up.

DOOM LOOPS

Consumers also report that customer service issues can worsen when third-party merchants get

involved, as there are more points of failure where consumers can lose out on rewards value. A

number of consumers tell nearly-identical stories of a “doom loop” – being redirected from a

bank to the merchant partner and back again – each dealing with different issuers and different

retailers at different times:

 “I attempted to access my [Frequent Flyer] Account via [Airline]. [Airline] notified me

the account that was linked to MY credit Card was not mine. I informed [Bank]. [Bank]

informed me to contact [Airline]. [Airline] informed me to contact [Bank].”

 “[Merchant Partner] linked the credit card to a closed account and made it impossible

to redeem the cash back rewards. I tried to have the problem fixed by [Merchant

Partner] and [Bank] but they kept transferring me back and forth and refused to take

responsibility.”

 “My experience is that [Bank] sends you to [Retailer] and [Retailer] sends you to

[Bank] and round and round.”

These complaints indicate that financial institutions may sometimes lack the basic

infrastructure to communicate with merchant partners and effectively resolve rewards issues.

TECHNICAL GLITCHES

Consumers reported problems with issuers’ technology and subsequently unhelpful technical

support when attempting to redeem rewards. For example, one consumer described their

experience with customer service as “copy paste malarkey” when the issuer failed to award

rewards for months due to a system update.

Often, consumers faced problems transferring

Consumer Complaint 6757489, https://www.consumerfinance.gov/data-research/consumer-

complaints/search/detail/6757489.

Consumer Complaint 3250565, https://www.consumerfinance.gov/data-research/consumer-

complaints/search/detail/3250565.

Consumer Complaint 7625924, https://www.consumerfinance.gov/data-research/consumer-

complaints/search/detail/7625924.

Consumer Complaint 7359727, https://www.consumerfinance.gov/data-research/consumer-

complaints/search/detail/7359727.

Consumer Complaint 5952196, https://www.consumerfinance.gov/data-research/consumer-

complaints/search/detail/5952196.

19 CONSUMER FINANCIAL PROTECTION BUREAU

rewards to merchants’ loyalty programs. Converting credit card points to airline miles or hotel

points can be one of the costliest redemptions for issuers to provide;

however, the ultimate

value to consumers depends on a quick and accurate conversion. In one instance, consumers

reported being unable to transfer their rewards when the redemption portal was down for

maintenance for weeks.

In another example, a seemingly simple issue such as variations in

cardholder names across two systems prevented the timely transfer of rewards.

Delays can cost consumers given the quickly changing availability and value of many common

redemptions, especially travel. A deal available on Monday can easily be gone by Friday, much

less weeks later once a transfer issue is resolved. As one person wrote,

“Such a delay is not only unreasonable but also places an undue burden on me as a

customer. The inability to transfer my points in a timely manner significantly hampers my

ability to utilize the benefits of my [rewards] effectively.”

REWARDS REIMBURSEMENT

Complaints also note that, once the transfer to a third-party merchant occurs, the card issuer is

unwilling to reimburse rewards that are ultimately unredeemable. One consumer described that

she was unable to book award flights due to technical issues on an airline’s website after

transferring points from the issuer. The cardholder initiated a “point dispute” with the bank and

was assured that the transfer would be reversed, and a customer service representative would

reach out once it was resolved. A week later, with no contact, she called back and was told the

dispute was unsuccessful, finding, “[Bank] basically refused to argue with [Airline] on behalf of

their customers and customers literally have no protection at all after they initiate a

transfer.”

In similar stories across years of complaints, issuers refuse to refund cardholders

American Express, Q4 2024 Earnings Call (Jan. 26, 2023).

Consumer Complaint 6044614, https://www.consumerfinance.gov/data-research/consumer-

complaints/search/detail/6044614. Katie Genter, You may not be able to transfer Capital One miles to airlines and

hotels right now: Here's what you need to know, The Points Guy (Sep. 28, 2022),

https://thepointsguy.com/news/capital-one-transfer-outage/.

Consumer Complaint 6538498, https://www.consumerfinance.gov/data-research/consumer-

complaints/search/detail/6538498.

Consumer Complaint 7451697, https://www.consumerfinance.gov/data-research/consumer-

complaints/search/detail/7451697.

Consumer Complaint 3092200, https://www.consumerfinance.gov/data-research/consumer-

complaints/search/detail/3092200.

20 CONSUMER FINANCIAL PROTECTION BUREAU

points or miles after technical issues occur or consumers are otherwise unable to use rewards

through no fault of their own.

2.4 Revocation

Issuers forfeit, expire, revoke, or otherwise take away hundreds of millions of dollars in earned

rewards value each year.

This means banks benefit from marketing high promotional bonuses

and earning rates but do not end up paying out the full cost of those offers. Every quarter, four

percent of accountholders loses access to at least some of their rewards.

The complaints below

reflect consumer frustration in a few common scenarios.

ACCOUNT CLOSURE

In the most extreme example, an issuer unilaterally closes a credit card account and the

consumer forfeits previously earned rewards.

Credit card companies can generally close an

account without notice, and the terms of some rewards programs indicate that the consumer

forfeits their rewards in this situation.

100

Consumers complain to the CFPB that unexpectedly

Consumer Complaint 2771424, https://www.consumerfinance.gov/data-research/consumer-

complaints/search/detail/2771424; Consumer Complaint 6494726, https://www.consumerfinance.gov/data-

research/consumer-complaints/search/detail/6494726; Consumer Complaint 6019960,

https://www.consumerfinance.gov/data-research/consumer-complaints/search/detail/6019960.

2023 Report, supra note 3, at 102.

Id.

Some policymakers have already acted against rewards forfeiture in cases like these: starting in December 2023,

the state of New York required a 90-day grace period for the use of credit card reward points after notification of

account closure or impending revocation. New York State, Governor Hochul Announces New Consumer Protection

Law for Credit Card Customers Will Take Effect on December 10 (Dec. 8, 2023),

https://www.governor.ny.gov/news/governor-hochul-announces-new-consumer-protection-law-credit-card-

customers-will-take-effect.

100

See, e.g., Citi, Citi ThankYou Rewards Terms & Conditions,

https://www.thankyou.com/cms/thankyou/tc.page?pageName=tc (last accessed, Mar. 25, 2024); see also, Chase,

Chase Sapphire Preferred® with Ultimate Rewards® Program Agreement,

https://www.chase.com/sapphire/rewardsagreement (last accessed, Mar. 25, 2024); see finally, Wells Fargo, Wells

Fargo Rewards® Program Terms and Conditions and Addendum,

https://consumercard.wellsfargorewards.com/#/tnc (last accessed, Mar. 25, 2024) [however, this card also has a

separate provision for New York accountholders, stating, “if the Credit Card tied to Your Rewards Account is closed

for any reason (except fraud or misuse), We will issue a check for the cash equivalent value of any available Rewards

balance in Your Rewards Account”].

Other issuers choose to provide a check with the rewards balance to all consumers upon account closure. See, e.g.,

Discover, Discover it Card Cashback Bonus program Terms and Conditions,

https://www.discover.com/content/dam/discover/en_us/credit-cards/card-acquisitions/grey-

redesign/global/pdf/Ts_Cs_DIscover_It_Ts_Cs_small.pdf (last accessed, Mar. 25, 2024).

21 CONSUMER FINANCIAL PROTECTION BUREAU

losing the ability to make purchases and access an existing credit line negatively affects their

finances. On top of that, the loss of previously saved rewards can be particularly painful:

“[The Bank] advised me that my reward was forfeited due to the closure of my account. No

rhyme, reason, or explanation, just a harmful and reckless theft of rewards that were

based on valid purchases during the year … So, I have no job, unemployment benefits have

expired and the [rewards amount] I was planning on has evaporated. It’s yet another

example of a financial company that coldly, unsympathetically, and egregiously takes from

those most vulnerable when they need financial assistance the most.”

101

Other consumers echoed feeling stolen from and “bullied by a multi-billion dollar company”

after rewards forfeiture due to involuntary account closure.

102

Another consumer highlighted the

opportunity cost of spending on a particular card once rewards were revoked, writing “I feel like

it is unethical to take away my reward dollars that I earned charging their card instead of any

other credit cards.”

103

One complaint also noted the double standard of still needing to make

payments on the outstanding debt and monthly interest while being blocked from redeeming

previously earned benefits (that could be used to pay down their balances).

104

Finally, a

consumer who initiated account closure but then surprisingly lost rewards value wrote, that, if

they had been told about the forfeiture policy, they would have used the rewards before the

account was closed: “No one in their right mind would throw away [rewards], especially with

paychecks being stretched thin and inflation at an all-time high.”

105

EXPIRATION

Banks revoke earned rewards from consumers with open and active accounts through

expiration. Consumers have expressed significant frustration in complaints when companies do

not adequately communicate impending rewards revocation:

101

Consumer Complaint 6560711, https://www.consumerfinance.gov/data-research/consumer-

complaints/search/detail/6560711.

102

Consumer Complaint 7284455, https://www.consumerfinance.gov/data-research/consumer-

complaints/search/detail/7284455; Consumer Complaint 4295060, https://www.consumerfinance.gov/data-

research/consumer-complaints/search/detail/4295060.

103

Consumer Complaint 6024647, https://www.consumerfinance.gov/data-research/consumer-

complaints/search/detail/6024647.

104

Consumer Complaint 5017914, https://www.consumerfinance.gov/data-research/consumer-

complaints/search/detail/5017914.

105

Consumer Complaint 6152082, https://www.consumerfinance.gov/data-research/consumer-

complaints/search/detail/6152082.

22 CONSUMER FINANCIAL PROTECTION BUREAU

“When I got the card, it said miles never expire. Now I learn a few months after that that

thousands of my miles have expired (worth hundreds of dollars), with no explanation, no

email warning, no calls from the company.”

106

Previous CFPB research found that the majority of issuers with rewards programs have an

expiration policy.

107

Most tied expiration to inactivity, which was inconsistently defined.

REVOCATION REVERSALS

Cardholders report frustration with the finality with which financial institutions treat rewards

revocation when issuers frequently reverse charges and refund purchases. One consumer

attempting to recover thousands of dollars in rewards value said, “I have been told verbally that

it is impossible to restore rewards points after they have been revoked. This is obviously

untrue.”

108

The consumer was correct: the bank closed their account in error and ended up

reinstating almost one million points. In other cases, card issuers may offer some avenues for

reversals, such as allowing consumers to recover rewards — if they pay a fee.

109

106

Consumer Complaint 3235496, https://www.consumerfinance.gov/data-research/consumer-

complaints/search/detail/3235496.

107

2015 report, supra note 5, at 235.

108

Consumer Complaint 6180853, https://www.consumerfinance.gov/data-research/consumer-

complaints/search/detail/6180853.

109

Previous CFPB research found that half of the issuers analyzed provided consumers the ability to pay to reinstate

forfeited reward. 2015 Report, supra note 5, at 232. American Express, Why didn’t I earn Membership Rewards®

points and how can I reinstate them? (last accessed Apr. 2, 2024),

https://www.americanexpress.com/us/customer-

service/faq.didnt-earn-membership-reward-points.html.

23 CONSUMER FINANCIAL PROTECTION BUREAU

3. Conclusion

As credit card rewards grow in salience, complexity, and cost, the CFPB is paying careful

attention to consumers’ experiences with these programs as part of its effort to ensure a fair,

transparent, and competitive credit card market. The complaints received by the CFPB reflect

some concerning patterns with respect to promotional offers, earned benefits being devalued,

obstacles to consumers receiving their preferred redemptions, and the sudden revocation of

earned rewards. Federal consumer financial protection laws apply to rewards programs offered

in connection with credit cards, and the CFPB will continue to monitor credit card rewards

programs and work together with governmental partners to take necessary action on these

issues where appropriate. Credit card issuers should take care to ensure that their conduct with

respect to the administration of credit card rewards programs conforms with the law.