Regulating Credit Card Rewards and Airline Loyalty Schemes: Complexity, Transparency, and Consumer Harm

Federal officials are closely examining the points and miles awarded through credit card rewards programs and airline loyalty schemes due to concerns about their complexity, lack of transparency, and potential harm to consumers. Both the Department of Transportation (DOT) and the Consumer Financial Protection Bureau (CFPB) have raised issues regarding the limited redemption opportunities, hidden and complex terms, and rewards that are devalued or denied even after meeting the original requirements. The CFPB has already capped credit card late fees at $8, and the DOT has recently introduced new rules requiring airlines to provide cash refunds for cancelled or significantly altered flights. However, neither agency has revealed concrete plans to regulate these programs, and it remains uncertain whether they possess the necessary authority to do so. Some experts believe that clarifying the value of rewards points for consumers and preventing unfair practices that exclude smaller airlines and banks from offering substantial rewards schemes may be priorities for regulation. Despite criticisms leveled at these programs by some, proponents argue that they are incredibly popular, with millions of Americans relying on them to cover costs such as groceries, fuel, and vacation expenses.