Credit Card and Other Rewards Programs in the Crosshairs

Rewards programs drive consumer choice and activity in connection with credit cards and other financial services. The CFPB has reported the most important element by far that influences a consumer’s decision to apply for a specific credit card is the rewards program associated with the card. Further, rewards can affect the consumer's choice at the point of sale as to which card to use. In this podcast episode, which repurposes a recent webinar, we explore recent trends in scrutiny of credit card rewards programs and other rewards programs by state and federal regulators and lawmakers. We also address laws and regulations, enforcement, emerging pitfalls, and best practices applicable to rewards programs. We open with a review of how rewards have been treated in the CFPB's reports on the credit card market since 2013, and the significance of and learnings from these reports. We then focus on complaints and federal regulators’ enforcement activity relating to rewards programs. Next, we turn to state law developments affecting rewards programs, including laws that specifically apply to rewards programs as well as contract, interchange, and UDAP / UDAAP laws. We then delve into other topics including the current focus on airline – credit card rewards programs by the Department of Transportation and the CFPB; the CFPB’s May 2024 report about credit card rewards; and important elements card issuers should keep in mind in the context of co-brand credit card rewards programs. We then conclude with a discussion on best practices to consider in mitigating risks and maximizing the benefits of rewards programs. Alan Kaplinsky, Senior Counsel in Ballard Spahr’s Consumer Financial Services Group, moderates today’s episode, and is joined by Michael Guerrero and Joseph Schuster, Partners in the Group, and Kristen Larson, Of Counsel in the Group.