A major American banking trade body has launched a stinging rebuke of a federal consumer watchdog, arguing its concerns about credit card rewards programmes are "unfounded". This clash could deter future investigations into alleged manipulation by card issuers.
Watchdog's Memo Sparks Industry Fury
The row centres on a memo issued in December 2024 by the US Consumer Financial Protection Bureau (CFPB). The bureau, which protects consumers from financial misconduct, stated it had received complaints that credit card companies were manipulating the valuation and issuance of reward points and miles.
The CFPB suggested that practices such as altering the number of points needed for a redemption—like increasing the points required for a hotel stay—could resemble illegal "bait-and-switch" schemes. It argued that vague terms and conditions gave issuers too much power, potentially leading to "unfair or deceptive acts" under consumer protection law.
Banking Association Fires Back
In a letter sent this week to the CFPB's acting director, Russell Vought, the American Bankers Association (ABA) mounted a robust defence. The association, representing the banking industry, directly challenged the bureau's assertions.
The ABA pointed to the CFPB's own data, noting that a mere 0.09 percent of complaints in its database related to credit card rewards. It further highlighted that 99.2% of complaints received a timely response from issuers, with over a third resolved with monetary or non-monetary relief.
"Contrary to the CFPB’s assertions, credit card rewards programs are widely accessible, valuable, and clearly understood by consumers across all income levels," the ABA wrote. The group praised rewards programmes for offering cashback, travel miles, and merchandise, while also fostering customer loyalty for issuers.
Potential Impact on Future Enforcement
This forceful pushback from a powerful industry lobby could influence the CFPB's regulatory appetite. The memo under fire was released during the tenure of former director Rohit Chopra, who served under the Biden administration before being replaced by Vought in February 2025.
Analysts suggest the ABA's intervention may cause law enforcement to back off from future probes into rewards programme practices. The banking group concluded its letter by asserting that as the market innovates, rewards programmes "will continue to deliver significant value to consumers, including convenience, flexibility, and savings."
The public dispute lays bare the tension between consumer protection ambitions and industry self-regulation, setting the stage for continued debate over the fairness of popular loyalty schemes.
