Consumer Financial Protection Circular 2024-07: Design, Marketing, and Administration of Credit Card Rewards Programs

Publisher currently lists this guidance: Consumer Financial Protection Circular 2024-07: Design, Marketing, and Administration of Credit Card Rewards Programs , 89 FR 106277 (Dec. 30, 2024).

106277 Federal Register/ Vol. 89, No. 249 / Monday, December 30, 2024 / Rules and Regulations
1
See CFPB, The Consumer Credit Card Market
(Oct. 2023) (hereinafter ‘‘2023 Report’’) at 98,
https://files.consumerfinance.gov/f/documents/
cfpb_consumer-credit-card-market-report_2023.pdf.
An industry survey found that rewards and cash
back programs were the top reason why consumers
chose one card over another, as well as the top
reason consumers cited for increasing spending on
credit cards over the last six months. PYMNTS and
Elan, Credit Card Use During Economic Turbulence
(Dec. 2023), https://www.pymnts.com/wp-content/
uploads/2023/05/PYMNTS-Credit-Card-Use-
During-Economic-Turbulence-May-2023.pdf. See
also Arielle Feger, Cash-back rewards drive
consumers to open new credit cards, eMarketer
(Mar. 26, 2024), https://www.emarketer.com/
content/cash-back-rewards-drive-consumers-open-
new-credit-cards; Drazen Prelec, How credit cards
activate the reward center of our brains and drive
spending, MIT Sloan (June 9, 2021), https://
mitsloan.mit.edu/experts/how-credit-cards-activate-
reward-center-our-brains-and-drive-spending.
2
2023 Report at 99. One study also found that
between 2021 and 2023, while total credit card
applications decreased by 2 percent, applications
for rewards cards and rewards cards with tiered
earnings grew by 5 percent and 8 percent,
respectively. Marketa Canayaz, Consumer Demand
for Rich Rewards Rises, Comscore (July 17, 2024),
https://www.comscore.com/Insights/Blog/
Consumer-Demand-for-Rich-Rewards-Rises.
3
2023 Report at 100. See also Electronic
Payments Coalition, New Study Shows LMI
Households Rely on Credit Card Rewards,
Electronic Payments Coalition (Apr. 30, 2024),
https://electronicpaymentscoalition.org/2024/04/
30/new-study-data-shows-credit-card-rewards-are-
a-lifeline-for-working-class-americans/. Despite the
growth in the use of rewards cards among
consumers with lower credit scores, in many cases,
these consumers do not benefit from these rewards
programs, and research has shown that consumers
with higher credit scores generally benefit from
credit card rewards programs at the expense of
consumers with lower credit scores. See Sumit
Agarwal, et al., Who Pays for Your Rewards?
Redistribution in the Credit Card Market (Dec. 5,
2022), http://dx.doi.org/10.2139/ssrn.4126641.
4
CFPB, Credit Card Rewards (May 2024)
(hereinafter ‘‘Credit Card Rewards Issue Spotlight’’)
at 9, https://files.consumerfinance.gov/f/
documents/cfpb_credit-card-rewards_issue-
spotlight_2024-05.pdf.
5
2023 Report at 100. Notably, consumers also
forfeit about $500 million in rewards each year. Id.
at 102.
6
See Rimma Kats, Survey Highlights Growing
Consumer Appetite for Paying with Points,
Payments Journal (Jan. 3, 2024), https://
www.paymentsjournal.com/survey-highlights-
growing-consumer-appetite-for-paying-with-points/
(noting that a majority of consumers favor
redeeming their points at grocery stores, online
retail outlets, and at gas stations). See also Chase
Survey Reveals How Credit Card Rewards Are
Enhancing The Holiday Season, Chase Media
Center (Nov. 20, 2023), https://media.chase.com/
news/chase-holiday-rewards-survey (noting that
during the holiday season, 33 percent of consumers
planned to use rewards to pay for gifts and 25
percent on groceries for holiday meals). See, e.g.,
Bilt, How do I redeem points towards a down
payment?, https://support.biltrewards.com/hc/en-
us/articles/10377953401869-How-do-I-redeem-
points-towards-a-down-payment.
7
See Agarwal supra note 4, at 8. In 2021, more
than one in three general purpose credit cards
offered were co-branded. See 2023 Report at 25. In
addition to rewards currencies and cash back,
rewards programs also increasingly offer other
affiliated benefits or lifestyle rewards, such as
access to airport lounges and priority boarding.
Credit Card Rewards Issue Spotlight at 8.
8
See CFPB, The Consumer Credit Card Market at
212–13 (Dec. 2015), http://
files.consumerfinance.gov/f/201512_cfpb_report-
the-consumer-credit-card-market.pdf.
9
See id. at 213.
CONSUMER FINANCIAL PROTECTION
BUREAU
12 CFR Chapter X
Consumer Financial Protection
Circular 2024–07: Design, Marketing,
and Administration of Credit Card
Rewards Programs
AGENCY
: Consumer Financial Protection
Bureau.
ACTION: Consumer financial protection
circular.
SUMMARY: The Consumer Financial
Protection Bureau (Bureau or CFPB) has
issued Consumer Financial Protection
Circular 2024–07 titled, ‘‘Design,
marketing, and administration of credit
card rewards programs.’’ In this circular,
the CFPB responds to the question,
‘‘Can credit card issuers violate the law
if they or their rewards partners devalue
earned rewards or otherwise inhibit
consumers from obtaining or redeeming
promised rewards?’’
DATES: The CFPB released this circular
on its website on December 18, 2024.
ADDRESSES: Enforcers, and the broader
public, can provide feedback and
comments to Circulars@cfpb.gov.
FOR FURTHER INFORMATION CONTACT:
George Karithanom, Regulatory
Implementation & Guidance Program
Analyst, Office of Regulations, at 202–
435–7700 or at: https://
reginquiries.consumerfinance.gov/. If
you require this document in an
alternative electronic format, please
contact CFPB_Accessibility@cfpb.gov.
SUPPLEMENTARY INFORMATION:
Question Presented
Can credit card issuers violate the law
if they or their rewards partners devalue
earned rewards or otherwise inhibit
consumers from obtaining or redeeming
promised rewards?
Response
Yes. Covered persons that offer,
provide, or operate credit card rewards
programs, and their service providers,
may violate the prohibition against
unfair, deceptive, or abusive acts or
practices in a variety of circumstances,
including instances where some of the
conduct in question may be attributable
to a third party, such as a merchant
partner, and regardless of whether
covered persons or service providers are
taking actions consistent with rewards
program terms. This circular provides
some examples where covered persons
that offer, provide, or operate credit card
rewards programs, and their service
providers, may violate the prohibition
against unfair, deceptive, and abusive
acts or practices, where: (1) the
redemption values of rewards that
consumers have already earned or
purchased are devalued; (2) consumers’
receipt of rewards is revoked, canceled,
or prevented based on buried or vague
conditions, such as criteria disclosed
only in fine print or up to the operator’s
discretion; or (3) consumers have
reward points deducted from their
balance without receiving the
corresponding benefit of the rewards,
including due to technical failures when
redeeming rewards points on merchant
partners’ systems.
Background on Credit Card Rewards
Programs
Rewards programs are increasingly
used to encourage consumers to apply
for and use specific credit cards.
1
As of
2019, more than 90 percent of general
purpose credit card spending occurred
on rewards cards, and by the end of
2022, 75 percent of general purpose
credit cards were rewards cards.
2
While
rewards cards are more common for
consumers with higher credit scores, the
use of rewards cards is growing fastest
among deep subprime, subprime, and
near-prime consumers.
3
The amount of
money or value that consumers earn and
maintain in credit card rewards
programs is also large and has increased
substantially in recent years. For
example, in 2022, consumers earned
more than $40 billion in rewards from
major general-purpose credit cards,
more than a 50 percent increase from
2019.
4
Consumer rewards balances at
the end of 2022 were more than $33
billion, up 40 percent relative to the
fourth quarter of 2019.
5
More consumers
are also using rewards to make
payments, including for day-to-day
purchases and necessary expenses.
6

Credit card rewards programs are
typically structured around earning
rewards ‘‘currencies’’—most commonly
‘‘miles’’ or other units of value issued by
a co-brand partner (such as an airline or
hospitality chain) or, alternatively, a
credit card issuer’s own ‘‘points.’’
7

Consumers typically earn miles or
points through credit card spending or
by directly purchasing them in
accordance with pre-determined
formulas, or ‘‘earn rates.’’
8
Many issuers
also offer promotional rewards through
things like sign-up bonuses and
referrals.
9

Once earned or purchased by
consumers, points can be redeemed for
rewards like ‘‘cash back’’ (statement
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106278 Federal Register/ Vol. 89, No. 249 / Monday, December 30, 2024 / Rules and Regulations
10
Credit Card Rewards Issue Spotlight, supra
note 4, at 7. Both quantitative and qualitative
evidence indicate consumers spend across months
or years to earn sufficient points or miles for
infrequent large purchases. See, e.g., id. at 15; 2023
Report at 100.
11
See, e.g., American Express, Membership
Rewards Program Terms and Conditions, https://
rewards.americanexpress.com/myca/loyalty/us/
catalog/tandc (last accessed Sept. 4, 2024); Citi, Citi
ThankYou Rewards Terms & Conditions, https://
www.thankyou.com/cms/thankyou/
tc.page?pageName=tc (last accessed Sept. 4, 2024);
Chase, Chase Sapphire Preferred
®
with Ultimate
Rewards
®
Program Agreement, https://
www.chase.com/sapphire/rewardsagreement (last
accessed Sept. 4, 2024); Wells Fargo, Wells Fargo
Rewards
®
Program Terms and Conditions and
Addendum, https://
consumercard.wellsfargorewards.com/#/tnc (last
accessed Sept. 4, 2024); Southwest, What are the
Rapid Rewards Rules and Regulations, https://
support.southwest.com/helpcenter/s/article/rapid-
rewards-rules-and-regulations (last accessed Sept.
4, 2024) 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/.
12
See, e.g., United Airlines, MileagePlus Investor
Presentation, at 23 (June 15, 2020) (MileagePlus
program can ‘‘adjust[ ] award pricing based on
expected foregone revenue for United’’), https://
ir.united.com/static-files/1c0f0c79-23ca-4fd2-80c1-
cf975348bab9; Delta Airlines, Delta Air Lines
SkyMiles Investor Presentation, at 17 (Sept. 14,
2020) (dynamic pricing model of SkyMiles rewards
program allows ‘‘flexibility to control costs and
preserve margins’’), https://www.sec.gov/Archives/
edgar/data/27904/000119312520244688/
d27099dex991.htm; American Airlines, American
Airlines AAdvantage Investor Presentation, at 22,
35 (Mar. 2021) (AAdvantage ‘‘control[s] the
‘exchange rate’ between miles and dollars,’’ which
provides flexibility to ‘‘manage costs’’ and ‘‘steer
reward demand to optimal flights based on cash
displacement risk.’’), https://www.sec.gov/Archives/
edgar/data/6201/000000620121000022/
aainvestorpresentation.htm.
13
See Jamie Lauren Keiles, The Man Who Turned
Credit-Card Points Into an Empire, The New York
Times (Jan. 5, 2021), https://www.nytimes.com/
2021/01/05/magazine/points-guy-travel-
rewards.html (how ‘‘as rewards programs have
multiplied, the earned point has grown increasingly
complex and fungible’’); Credit Card Rewards Issue
Spotlight, supra note 4, at 6.
14
See Credit Card Rewards Issue Spotlight, supra
note 4, at 11, 20; New York General Business Law
§ 520–e (2023).
15
In 2023, there was a more than 70 percent
increase in complaints involving credit card
rewards over pre-pandemic levels. Credit Card
Rewards Issue Spotlight, supra note 4, at 2.
16
See, e.g., id. at 15, 16.
17
See, e.g., id. at 13.
18
See, e.g., id. at 15.
19
See, e.g., id. at 17.
20
See, e.g., id. at 18.
21
See, e.g., id.
22
See, e.g., id.
23
See, e.g., id. at 19.
24
12 U.S.C. 5531(a); see also 12 U.S.C.
5536(a)(1)(B).
25
12 U.S.C. 5531(c)(1).
26
See, e.g., FTC v. Wyndham Worldwide Corp.,
799 F.3d 236, 246 (3d Cir. 2015).
27
See FTC v. Neovi, Inc., 604 F.3d 1150, 1158
(9th Cir. 2010) (interpreting whether consumer’s
injuries were reasonably avoidable under the FTC
Act); Orkin Exterminating Co. v. FTC, 849 F.2d
1354, 1365–66 (11th Cir. 1988) (same); Am. Fin.
Servs. Ass’n v. FTC, 767 F.2d 957, 976 (D.C. Cir.
1985) (same).
28
See CFPB v. Gordon, 819 F.3d 1179, 1192–93
(9th Cir. 2016).
29
Novartis Corp. v. FTC, 223 F.3d 783, 786 (D.C.
Cir. 2000) (quoting In re Cliffdale Assocs., Inc., 103
FTC 110, 165 (1984)).
credits or direct deposits) or transfers to
a co-brand or merchant partner (e.g.,
miles or merchant-specific gift cards),
and also for other types of goods or
services, like buying merchandise,
donating to charities, applying to
purchases at check out, and others.
10

However, both credit card issuers and
loyalty programs generally reserve, and
often assert a right to, unilaterally
change the value of rewards, including
at the point of redemption.
11
Reward
points or miles valuation changes can
sometimes be tied to price changes in
the underlying product or service for
which the reward is being redeemed
(e.g., changes in flight pricing), but
program operators also adjust rewards
redemption rates distinct from
underlying prices, apparently as a
means to ‘‘preserve’’ or ‘‘maintain’’
profit margins.
12

As the market for credit card rewards
programs has grown, so too has their
complexity.
13
Rewards program
operators often assert their ability to
unilaterally modify credit card rewards
programs, which has caused at least one
State to take action to provide
consumers with additional protections
against such unilateral program
modifications.
14
Additionally, the
number of consumer complaints that the
CFPB receives about credit card rewards
programs has also risen dramatically in
recent years.
15
Many consumers’
complaints describe how the marketing
or initial offering of a rewards program
is inconsistent with their actual, later
experiences earning and redeeming
credit card rewards. For instance,
consumers have complained to the
CFPB about companies devaluing their
rewards relative to what they were
marketed, or increasing barriers to
redeeming cash or cash-equivalent
rewards, such as eliminating the ability
for consumers to redeem points for a
statement credit.
16

Consumers have also complained
about being denied access to
promotional or other rewards because of
terms or other requirements hidden in
their cardholder or rewards program
agreements, including instances of
unexpectedly being found ineligible
after applying for a credit card
17
or
being forced to return a promotional
offer because they closed their account
within a certain period.
18
For many of
these types of complaints, companies
and merchant partners justified
revoking, canceling, or preventing
consumer access to rewards through
requirements and guidelines absent
from their marketing materials and only
found buried in their cardholder or
rewards program agreements.
Consumers have also repeatedly
alerted the CFPB about difficulties
redeeming their rewards or inexplicably
seeing their points disappear. These
reported challenges include issues with
customer service,
19
technical failures,
20

and dispute resolution,
21
all of which
can be further compounded when
neither the issuer nor its merchant
partner accept responsibility and both
refer consumers to the other.
22
Because
of these issues, some consumers have
seen their rewards disappear when
being transferred or applied to a
merchant partner, with little recourse to
resolve such problems.
23

Analysis
The CFPA prohibits any ‘‘covered
person’’ or ‘‘service provider’’ from
‘‘committing or engaging in an unfair,
deceptive, or abusive act or practice
under Federal law in connection with
. . . the offering of a consumer financial
product or service.’’
24
An act or practice
is unfair when: (1) it causes or is likely
to cause substantial injury to consumers
that is not reasonably avoidable by
consumers and (2) such injury is not
outweighed by countervailing benefits
to consumers or to competition.
25

Substantial injury includes monetary
harm, and may be based on likely rather
than actual injury.
26
In general, an
injury is not reasonably avoidable if
consumers cannot reasonably anticipate
the injury, or when there is no way to
avoid the injury even if it is
anticipated.
27

Under the CFPA, a representation,
omission, or practice is deceptive if it is
likely to mislead a reasonable consumer
and is material.
28
Representations,
omissions, or practices are ‘‘material’’ if
they ‘‘involve[ ] information that is
important to consumers and, hence,
likely to affect their choice of, or
conduct regarding, a product.’’
29
In
assessing the meaning of a
communication, the CFPB looks to its
overall, net impression; in other words,
the CFPB considers the entire
advertisement, transaction, or course of
dealing rather than evaluating
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30
See, e.g., CFPB v. Aria, 54 F.4th 1168, 1173 (9th
Cir. 2022); Gordon, 819 F.3d at 1193; FTC v. E.M.A.
Nationwide, Inc., 767 F.3d 611, 631 (6th Cir. 2014);
Fanning v. FTC, 821 F.3d 164, 170 (1st Cir. 2016).
31
FTC, Policy Statement on Deception (Oct. 14,
1983).
32
See, e.g., Sterling Drug, Inc. v. FTC, 741 F.2d
1146, 1154 (9th Cir. 1984) (advertisements referring
to ‘‘unique formula’’ were deceptive because they
could lead consumers to infer that pain reliever’s
formulation was something other than ordinary
aspirin); see also FTC v. Bay Area Business Council,
Inc., 423 F.3d 627, 635 (7th Cir. 2005) (‘‘[T]the
omission of a material fact, without an affirmative
misrepresentation, may give rise to an FTC Act
violation.’’).
33
FTC, Policy Statement on Deception (Oct. 14,
1983).
34
In 2022, rewards card spending was 90 percent
of all consumer spending on general purpose credit
cards. CFPB, The Consumer Credit Card Market, at
99 (Oct. 2023), https://files.consumerfinance.gov/f/
documents/cfpb_consumer-credit-card-market-
report_2023.pdf. See also Background on Credit
Card Rewards Programs, supra.
35
Id. at 98. Because credit card rewards programs
are offered or provided ‘‘in connection’’ with a
consumer financial product or service (the
extension of credit to consumers), the ‘‘covered
persons’’ or ‘‘service providers’’ who offer, provide,
or support such programs (hereinafter ‘‘rewards
program operators’’) must comply with the CFPA,
including its prohibitions against unfair, deceptive
or abusive acts or practices, as well as other
applicable consumer financial protection laws. In
the typical case, a credit card issuer providing the
rewards program would be a ‘‘covered person,’’
while ‘‘service providers’’ could include the
partners or vendors that provide material services
on the rewards program in connection with the
credit card program, such as co-brand or merchant
partners that deliver applicable rewards, or vendors
who operate the key infrastructure or platforms for
consumers to view, manage, and use their rewards
earnings. See 12 U.S.C. 5481(6), 5481(26)(A).
36
While not specifically discussed in this
circular, rewards program operators must also
comply with the CFPA’s prohibition on abusive acts
or practices, 12 U.S.C. 5531(d), which provides that
an act or practice is abusive if it (1) materially
interferes with a consumer’s ability to understand
a term or condition of a consumer financial product
or service or (2) takes unreasonable advantage of the
consumer’s (a) lack of understanding of the material
risks, costs, or conditions of the product or service;
(b) inability to protect their interests in selecting or
using a consumer financial product or service; or
(c) reasonable reliance on a covered person to act
in the consumer’s interests.
37
See, e.g., CFPB v. Ocwen Fin. Corp., No. 17–
80495–CIV, 2019 WL 13203853 at *30 (S.D. Fla.
Sept. 5, 2019) (finding that the CFPB sufficiently
alleged CFPA violations regarding add-on products
even where add-on vendor was responsible for
enrolling borrowers to such add-on products); see
also, e.g., FTC v. Bay Area Bus. Council, Inc., 423
F.3d at 630) (affirming district court ruling that
multiple interrelated corporate and individual
defendants were liable under section 5 of FTC Act
for deceptive telemarketing scheme); FTC v. Neovi,
Inc., 604 F.3d 1150, 1155 (9th Cir. 2010) (‘‘a single
violation of the [FTC] Act may have more than one
perpetrator’’) (citing Bay Area).
38
See 16 CFR 238 et seq., FTC Guides Against
Bait Advertising. Cf. Rossman v. Fleet Card (R.I.)
Nat. Ass’n, 280 F.3d 384, 396–400 (3d Cir. 2002)
(credit card issuer soliciting business with no-
annual-fee offer while intending to later impose fee
constitutes a bait-and-switch scheme).
39
Cf. 24. FR 9755 (Dec. 4, 1959) (noting that FTC
enforcement actions with respect to bait-and-switch
schemes are brought under the FTC Act’s
prohibition on ‘‘unfair or deceptive acts or
practices’’); 32 FR 15540 (Nov. 8, 1967) (similar);
Synopsis of Federal Trade Commission Decisions
Concerning ‘‘Bait and Switch’’ Sales Practices
(Sept. 23, 1975) (‘‘The Federal Trade Commission
has determined that ‘bait and switch’ practices are
unfair or deceptive trade practices and are unlawful
under Section 5(a)(1) of Federal Trade Commission
Act.’’), https://www.ftc.gov/system/files/ftc_gov/
pdf/NOPO-Bait-and-Switch.pdf.
statements in isolation.
30
A
misrepresentation can be ‘‘an express or
implied statement [that is] contrary to
fact.’’
31
It may also be deceptive, for
example, when a seller partially
discloses information about the nature
of a product or service, but fails to
disclose other material information.
32

Further, ‘‘[w]ritten disclosures or fine
print may be insufficient to correct a
misleading representation.’’
33

Rewards programs are a feature
common to many credit cards, and tend
to both be prominently marketed by
issuers and widely used by
consumers.
34
Credit card rewards
programs also play a major role in
consumer’s choices on which cards to
apply for and use for any given
transaction.
35

The CFPB is issuing this circular to
underscore that the CFPA’s prohibition
on unfair or deceptive acts or practices
applies to the design, marketing, and
administration of credit card rewards
programs.
36
Rewards program operators
may violate this prohibition in a variety
of circumstances regardless of whether
they are taking actions consistent with
rewards program terms. In particular,
rewards program operators risk
committing unfair or deceptive acts or
practices when (1) rewards that
consumers have already earned are
devalued; (2) consumers’ receipt of
rewards is revoked, cancelled, or
prevented based on buried or vague
conditions; and (3) rewards points are
deducted without consumers receiving
the corresponding benefit of the
rewards. These examples are illustrative
and non-exhaustive.
As described further below, the CFPB
emphasizes that covered persons that
offer, provide, or operate credit card
rewards programs may be liable for an
unfair or deceptive act or practice where
some of the conduct in question may be
attributable to a third party or service
provider, such as a merchant partner.
37

Devaluation of Rewards Already
Earned or Purchased
Rewards program operators may
commit an unfair or deceptive act or
practice when they materially reduce
the overall value of rewards that
consumers have already earned or
purchased. Consumers make decisions
on whether to open or use a credit card
based on the explicit and implicit
representations about the value of card
benefits and rewards. For instance,
consumers’ reasonable expectations
about the value of rewards may be
informed by advertisements at account
opening, as well as by redemption
values of rewards communicated to
consumers on or around the time the
consumer makes decisions to purchase
goods with the card and accrue rewards
benefits. Furthermore, fine print
disclaimers or contract terms stating
that rewards program operators have the
right to adjust rewards offerings often
will not be sufficient to correct
consumers’ net impression about the
expected value of rewards.
When rewards operators influence
consumers’ expectations about the value
of rewards in their product or marketing
efforts (e.g., to support customer
acquisition, retention, or increased
purchase volume), but later make
decisions to deflate the overall value of
accrued rewards, they may have
engaged in actions that resemble a
traditional ‘‘bait-and-switch’’ scheme.
38

These activities may constitute unfair or
deceptive acts or practices under the
CFPA.
39

Enforcers investigating potentially
unfair or deceptive acts or practice
should consider a variety of different
devaluation tactics by rewards program
operators. Unfair or deceptive
devaluations are easier to detect when
the rewards program involves simple,
fixed redemption rates with one retailer
or merchant partner. But such schemes
may be harder to detect where there are
numerous potential rewards available or
rewards program operators implement
more complex program changes. For
example, if a rewards program operator
uses dynamic pricing for rewards
redemptions, enforcers can examine
whether the firm is unfairly or
deceptively devaluing points over time
by considering, for example, whether
the dynamic prices in points have
increased, in aggregate, relative to
dynamic cash prices for the same
products or services. Similarly, if a
rewards program includes redemption
options from multiple participating
merchant partners, and the rewards
program operator loses a major
merchant partner or a major partner
materially downgrades the service
provided, enforcers can look to whether
the rewards program operator is taking
reasonable measures to generally
maintain the value of rewards, such as
by increasing points usable at other
merchant partners, allowing customers
to cash out points, replacing lost
rewards with other rewards, or by other
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40
See, e.g., U.S. DOT, USDOT Requires Alaska
and Hawaiian Airlines to Preserve Rewards Value,
Critical Flight Service as Merger Moves Forward
(Sept. 2024), https://www.transportation.gov/
briefing-room/usdot-requires-alaska-and-hawaiian-
airlines-preserve-rewards-value-critical-flight (in
connection with regulatory merger approvals,
Department of Transportation imposed ‘‘rewards
protections against devaluation,’’ including
requiring each earned loyalty program be converted
to new program miles at 1:1 ratio and prohibiting
‘‘any actions that would devalue HawaiianMiles
miles’’). The merger approval and requirements
were based on ‘‘[p]ublic interest criteria [that]
include preventing unfair, deceptive, predatory or
anticompetitive practices. . . .’’ Id.
41
See, e.g., Capital One Financial Corporation,
Annual Report (Form 10–K) (Feb. 24, 2023) (‘‘We
use the weighted-average redemption cost during
the previous twelve months, adjusted as
appropriate for recent changes in redemption costs,
. . . to estimate future redemption costs.’’).
Similarly, informational websites aimed at
consumers may also estimate rewards point values.
See, e.g., The Points Guy, TPG launches new data-
driven valuations for 6 major US airlines—and
updates methodology for credit card currencies
(Sept. 8, 2023), https://thepointsguy.com/news/
new-data-driven-valuations/.
42
Additionally, rewards program terms that
include unlawful or unenforceable conditions may
violate the CFPA’s prohibition on deceptive acts or
practices. CFPB Circular 2024–03, Unlawful and
unenforceable contract terms and conditions (June
2024), https://www.consumerfinance.gov/
compliance/circulars/consumer-financial-
protection-circular-2024-03/. For example, the
recently enacted New York statute referenced above
may render certain terms in rewards program
deceptive with respect to New York residents.
43
See Credit Card Rewards Issue Spotlight, supra
note 4, at 14.
44
Id. at 20.
45
See FTC, Bringing Dark Patterns to Light, at 7
(Sept. 2022) (‘‘Some dark patterns operate by hiding
or obscuring material information from consumers,
such as burying key limitations of the product or
service in dense Terms of Service documents that
consumers don’t see before purchase.’’), https://
www.ftc.gov/system/files/ftc_gov/pdf/P214800%
20Dark%20Patterns%20Report%209.14.2022%20-
%20FINAL.pdf. Cf. FTC v. Amazon.com, 2024 WL
2723812 at *1 (W.D. Wash. 2024) (denying motion
to dismiss of claims brought under Section 5 of the
FTC Act and the Restore Online Shoppers’
Confidence Act based on defendants ‘‘trick[ing],
coerc[ing], and manipulat[ing] consumers . . . by
failing to disclose the material terms of the
subscription clearly and conspicuously and by
failing to obtain consumers’ informed consent
before enrolling them’’); FTC v. Publishers Clearing
House LLC, No. 23–CV–4735 (E.D.N.Y. June 6,
2023) (complaint) (alleging defendant ‘‘employs
dark patterns throughout the consumer’s experience
by, among other things . . . placing disclosures in
small and light font and in places where a
consumer is unlikely to see them’’).
46
CFPB research suggests consumers lose
hundreds of millions of dollars in earned rewards
each year. 2023 Report, at 102.
47
See FTC v. Neovi, 604 F.3d at 1158; Am. Fin.
Servs. Ass’n v. FTC, 767 F.2d at 976.
48
See, e.g., FTC v. Commerce Planet, Inc., 878 F.
Supp. 2d 1048, 1079 (C.D. Cal. 2012) (consumers
could not reasonably avoid injury where sign-up
pages did not adequately disclose negative option
plan by burying in separate fine print disclosures).
49
Credit Card Rewards Issue Spotlight, supra
note 4, at 4, 11.
50
Id. at 12–13.
means. Additionally, when two firms
merge, resulting in a conversion of one
firm’s customers into a new rewards
program, enforcers can look at whether
the resulting firm took actions to
convert customers’ points to the new
system without a reduction in points
value.
40

In any investigation into whether a
rewards program operator has engaged
in an unfair or deceptive devaluation
scheme, enforcers are encouraged to
collect and consider accounting or other
metrics maintained by program
operators or others regarding rewards
values. For example, many companies
maintain internal figures on the dollar
value of outstanding rewards for
accounting purposes, including an
estimated cost-per-point or weighted
average redemption cost.
41
If a firm’s
cost-per-point or weighted average
redemption cost decreases over time,
that could suggest a firm has engaged in
a bait-and-switch or similar unfair or
deceptive act or practice.
The CFPB emphasizes that covered
persons that offer, provide, or operate
credit card rewards programs may be
liable for an unfair or deceptive act or
practice even when the material
devaluation of rewards could arguably
be attributed to the actions of a third
party. In other words, if a covered
person that offers, provides, or operates
a credit card rewards program makes
explicit or implicit representations
about, and thereby induces consumer
expectations regarding, the value of the
card benefits or rewards, and the value
of those benefits or rewards is
subsequently materially reduced by
actions that may be attributable to the
covered person’s merchant partner, the
covered person may be liable for an
unfair or deceptive act or practice.
Hidden Conditions
Rewards program operators also risk
committing unfair or deceptive acts or
practices when they revoke or cancel
rewards, or prevent the award of
rewards, based on buried or vague
conditions.
42
Rewards programs have
become increasingly complex, with
lengthy terms and unintuitive
restrictions that consumers may not be
aware of as they use their credit cards
day to day. These lengthy terms may use
buried or vague conditions set by
rewards program operators that are non-
negotiable and may not be consistent
with prominent promotional language
advertising the rewards that consumers
can earn. As noted above, consumer
complaints received by the CFPB
suggest that, despite descriptions in the
fine print of rewards program terms,
consumers often do not understand the
basis of many rewards forfeitures or
denials.
The following are illustrative
examples of potentially unfair rewards
program practices:
•Revoking or canceling rewards
based on vague catch-all language in
program terms, such as ‘‘gaming’’ or
‘‘abuse.’’ This can be especially
problematic when those terms are also
subject to the rewards program
operator’s discretion.
43

•Revoking previously earned
rewards based on policies that tie
revocation to actions that are not within
the consumer’s control and do not
constitute fraud or misconduct by the
consumer, like an issuer unilaterally
closing an account.
44

•Promotional ‘‘sign-up’’ offers that
are denied based on hidden conditions
that consumers were not reasonably
aware of, such as ‘‘churning’’ conditions
that restrict how frequently a consumer
can earn sign-up rewards, time periods
to earn rewards that are effectively
shortened by the hidden and
unavoidable period of time needed to
receive and activate a card, or
promotional offers that are unavailable
for applicants through certain channels.
These sorts of dark patterns and fine
print will often constitute deceptive
representations, omissions, or practices
about material concerns, and thus
violate the prohibition on deceptive
practices.
45
In addition, denying or
preventing rewards based on buried or
vague terms could cause a substantial
monetary injury in the form of lost
rewards value and may be unfair.
46

These injuries may not be reasonably
avoidable by consumers where
conditions are buried or vague, and
accordingly hinder consumers’ ability to
make a ‘‘free and informed choice.’’
47

Specifically, consumers cannot
reasonably avoid injuries where they are
not ‘‘adequately informed’’ of key
conditions or presented such
information in a confusing way.
48
As
noted above, rewards program operators
typically promote most prominently the
availability of rewards, even more so
than other key credit card terms, such
as APR or annual fees, while putting
conditions around rewards in fine
print.
49
Consumers may not understand
the restrictive eligibility criteria buried
in the fine print where program
operators send marketing materials that
target rewards promotions to the
specific consumers.
50
Similarly, a
consumer may be confused by the way
a rewards program operator interprets
vague catch-all language, such as terms
restricting rewards based on
impermissible ‘‘gaming’’ or ‘‘abuse,’’
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106281 Federal Register/ Vol. 89, No. 249 / Monday, December 30, 2024 / Rules and Regulations
51
For instance, consumer complaints indicate
rewards program operators may interpret as
impermissible ‘‘gaming’’ or ‘‘churning’’ consumer
card usage behaviors that are otherwise permissible
under cardholder agreements and satisfy objective
sign-up promotion criteria, such as closing an
account after spending the required amount for a
promotional rewards bonus. See id. at 14.
52
Notably, as with devaluation, the rewards
program operators have already benefitted from the
consumer spending on the relevant card by the time
they deny the rewards benefits.
53
Cf. In re UniRush and Mastercard Int’l Inc., No.
2017–CFPB–0010 (Feb. 1, 2017) (consent order)
(finding that failures to adequately test and
administer prepaid card program conversion were
unfair acts or practices), https://files.consumer
finance.gov/f/documents/201702_cfpb_UniRush-
Mastercard-consent-order.pdf. See also CFPB v.
Ocwen Financial Corp., No. 17–80495–CIV, 2019
WL 13203853 at *30 (S.D. Fla. Sept. 5, 2019)
(finding that the CFPB sufficiently alleged CFPA
violations regarding add-on products even where
add-on vendor was responsible for enrolling
borrowers to such add-on products); see also, e.g.,
FTC v. Bay Area Bus. Council, Inc., 423 F.3d at 630
(affirming district court ruling that multiple
interrelated corporate and individual defendants
were liable under section 5 of FTC Act for deceptive
telemarketing scheme); FTC v. Neovi, 604 F.3d at
1155 (‘‘a single violation of the [FTC] Act may have
more than one perpetrator’’) (citing Bay Area).
54
See Credit Card Rewards Issue Spotlight, supra
note 4, at 19 (‘‘the ultimate value to consumers [of
converting rewards points to miles or hotel points]
depends on a quick and accurate conversion’’).
55
See id. at 17 (complaints received by CFPB
indicate consumers spend time trying to resolve
rewards issues through ‘‘repeated calls, hours on
hold, and thorough documentation of the problem
at hand’’).
when those interpretations conflict with
prominent promotional language or
other representations.
51
There are no
countervailing benefits that outweigh
the injury to consumers or competition
of inducing consumers to use credit
cards with vague or fine-print
conditions that consumers cannot
reasonably understand.
52

Inability To Redeem Rewards
Rewards program operators can also
commit unfair or deceptive acts or
practices when their customers lose
their points because redemption
procedures do not function properly. In
offering rewards programs, operators
make representations to consumers
about how rewards can be redeemed,
often developing online interfaces for
consumers to use to redeem rewards. A
rewards program operator is accordingly
responsible for administering the
rewards program it offers, including
coordinating with its merchant partners
or vendors, so that consumers can
redeem the rewards that they have
earned and selected in accordance with
the rewards program.
53

If systems failures result in consumers
losing points when attempting to
redeem, it may result in a deceptive
practice because consumers would
typically have a basis to reasonably
believe they were purchasing products
or services with their points, which
would be false as a result of the failure.
It would likely also be unfair because
consumers would incur injury as a
result of the loss of rewards, with no
ability to avoid the harm and no
countervailing benefits that outweigh
the injury. Even if a rewards program
operator ultimately refunds unredeemed
points to a consumer, the consumer may
be harmed by the consumer’s inability
to redeem points in the interim,
54
and
often consumers end up expending
significant time and resources trying to
obtain the refund.
55
Consumers cannot
reasonably avoid these harms as they do
not have control over operators’ rewards
program administration, including
procedures for redeeming points or
converting them for use with co-brand
or merchant partners.
Again, the CFPB emphasizes that
covered persons that offer, provide, or
operate credit card rewards programs
may commit an unfair or deceptive act
or practice when the loss of points due
to failures of redemption procedures
could arguably be attributed to a
merchant partner or service provider.
For instance, a covered person may be
liable for an unfair or deceptive act or
practice when a consumer attempts to
transfer rewards points from the online
portal of such covered person to the
points portal of a merchant partner (e.g.,
requests a ‘‘conversion’’ of credit card
rewards points to points at a travel
partner), but technical failures on the
merchant partner’s system result in the
consumer losing the points.
About Consumer Financial Protection
Circulars
Consumer Financial Protection
Circulars are issued to all parties with
authority to enforce Federal consumer
financial law. The CFPB is the principal
Federal regulator responsible for
administering Federal consumer
financial law, see 12 U.S.C. 5511,
including the Consumer Financial
Protection Act’s prohibition on unfair,
deceptive, and abusive acts or practices,
12 U.S.C. 5536(a)(1)(B), and 18 other
‘‘enumerated consumer laws,’’ 12 U.S.C.
5481(12). However, these laws are also
enforced by State attorneys general and
State regulators, 12 U.S.C. 5552, and
prudential regulators including the
Federal Deposit Insurance Corporation,
the Office of the Comptroller of the
Currency, the Board of Governors of the
Federal Reserve System, and the
National Credit Union Administration.
See, e.g., 12 U.S.C. 5516(d), 5581(c)(2)
(exclusive enforcement authority for
banks and credit unions with $10
billion or less in assets). Some Federal
consumer financial laws are also
enforceable by other Federal agencies,
including the Department of Justice and
the Federal Trade Commission, the
Farm Credit Administration, the
Department of Transportation, and the
Department of Agriculture. In addition,
some of these laws provide for private
enforcement.
Consumer Financial Protection
Circulars are intended to promote
consistency in approach across the
various enforcement agencies and
parties, pursuant to the CFPB’s statutory
objective to ensure Federal consumer
financial law is enforced consistently.
12 U.S.C. 5511(b)(4).
Consumer Financial Protection
Circulars are also intended to provide
transparency to partner agencies
regarding the CFPB’s intended approach
when cooperating in enforcement
actions. See, e.g., 12 U.S.C. 5552(b)
(consultation with CFPB by State
attorneys general and regulators); 12
U.S.C. 5562(a) (joint investigatory work
between CFPB and other agencies).
Consumer Financial Protection
Circulars are general statements of
policy under the Administrative
Procedure Act. 5 U.S.C. 553(b). They
provide background information about
applicable law, articulate considerations
relevant to the Bureau’s exercise of its
authorities, and, in the interest of
maintaining consistency, advise other
parties with authority to enforce Federal
consumer financial law. They do not
restrict the Bureau’s exercise of its
authorities, impose any legal
requirements on external parties, or
create or confer any rights on external
parties that could be enforceable in any
administrative or civil proceeding. The
CFPB Director is instructing CFPB staff
as described herein, and the CFPB will
then make final decisions on individual
matters based on an assessment of the
factual record, applicable law, and
factors relevant to prosecutorial
discretion.
Rohit Chopra,
Director, Consumer Financial Protection
Bureau.
[FR Doc. 2024–30988 Filed 12–27–24; 8:45 am]
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