(Reuters) -Credit card companies that devalue or cancel the rewards points, cash back or miles that cardholders have earned may be breaking the law, the top U.S. watchdog agency for consumer finance warned on Wednesday.
In a policy circular, the U.S. Consumer Financial Protection Bureau said prohibitions against unfair, deceptive and abusive practices mean authorities may punish card issuers that slash the value of such rewards based on fine print, hidden terms or technical glitches.
The CFPB distributes such circulars to other agencies, including state attorneys general and local regulators, that enforce federal consumer financial laws.
As of 2022, three-quarters of all general-purpose credit cards were rewards cards and many consumers choose which to apply for and use based on the rewards offered, according to the CFPB.
Industry groups reacted negatively, accusing the CFPB of chasing headlines and tarnishing a popular product.
Rob Nichols, president of the American Bankers Association, said in a statement that complaints about credit card rewards were “extraordinarily uncommon” and accused the CFPB of putting political pressure on card issuers.
U.S. President-elect Donald Trump has yet to name someone to run the CFPB next year but observers say the agency is virtually assured to take a very different approach to enforcement and regulation. Trump ally Elon Musk has called for abolishing the agency.
Republican lawmakers have also demanded that financial regulators cease issuing new regulations until Trump takes office, a call the CFPB has not heeded.