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Prepared Remarks of CFPB Director Rohit Chopra at the Joint Hearing on Airline and Credit Card Rewards Programs

Thank you all for being here today. I especially want to thank Secretary Pete Buttigieg for convening today’s forum with me. The CFPB and the Department of Transportation share responsibility for enforcing a number of laws. The Secretary has taken actions that will benefit so many families, including the latest automatic refund rule and work to combat junk fees. Our agencies are now going to work closely together on credit cards.

Credit cards are the most common lending product in America, with more than 550 million cards in circulation and more than a trillion dollars in outstanding debt. Unlike mortgages or auto loans, where you typically know how much you’ll borrow and the monthly payment, credit cards are different. When you take out a credit card, you may have no debt at all. In fact, you may be primarily using it as a payment device with the goal of paying your balance off each month.

That’s why credit card companies have focused heavily on ways to bait people using features other than the interest rate and fees they charge. For example, before Congress banned the practice, it was common for credit card companies to bombard college campuses, giving away free t-shirts and university-branded merchandise for sign-ups at freshman orientations.

More recently, we’ve seen credit card rewards taking center stage in the industry’s marketing campaigns, particularly in the form of frequent flyer miles and other proprietary points programs. The largest and most dominant airlines play a massive role in this market. Most of us have witnessed the blitz of advertising online, in our mailboxes, on television, and even while seated on an airplane, about airline-branded credit cards that make promises about frequent flyer mile sign-up bonuses, free roundtrips, and other travel perks. For many families looking to finance a trip or vacation, these benefits can be very valuable.

However, frequent flyer programs have evolved from a perk for an airline’s most loyal customers to a multibillion-dollar currency market where credit card companies and airlines buy, sell, convert, and issue miles and points throughout sectors of the economy. Miles and points can be purchased with cash, earned, and redeemed for shopping on items entirely unrelated to flying. These points programs are major assets and competitive weapons for big airlines and big credit card companies alike.

The CFPB has been carefully studying this market, and we have a number of goals for this market.

Protecting People’s Points Against Currency Devaluation: When Americans sign up for rewards credit cards, they intuitively assign a monetary value to those points that make signing up and spending worthwhile. However, our initial review of the fine print suggests that credit card companies and airlines have the power to quickly and dramatically devalue those points by making it more challenging to redeem them or by limiting the inventory that can be purchased with points. We have also observed that airlines sell points to consumers at inflated rates, while selling those same points to credit card issuers at a much lower price. This not only creates confusion about the true value of the points, but also raises questions about fairness.

Stopping Bait-and-Switch Scams: As travel resumed in the aftermath of the pandemic, credit card companies ramped up their marketing on rewards, given the pent-up demand for family travel. However, some consumers have experienced a bait-and-switch, where credit card companies promised rewards, but didn’t come through. Consumers may even pay hefty annual fees, but may find that certain benefits may be stripped away without a clear option to get a refund. While credit card companies are required to give notice about changes to many key terms and conditions, consumers are concerned about fine print that can be used to take away valuable benefits and rewards.

Examining Exclusive Deals: The CFPB recently found that small banks and credit unions are offering lower interest rates than the biggest credit card giants. Many of these smaller players would like to offer a range of points and rewards options, just like we see in other industries, like rental cars. However, the largest credit card companies will make massive payments to an airline in exchange for refusing to sell points and miles to competing credit card companies. This has left smaller credit card companies unable to offer competing rewards within the same frequent flyer miles program.

Promoting Competition on Interest Rates: In 2022, Americans paid a record $130 billion in interest and fees on credit cards. Our initial review is that many large credit card issuers charge dramatically higher interest rates on rewards cards compared to non-rewards cards. For cardholders that carry a balance, this can wipe out all of the benefits of rewards. These same large credit card companies often offer a different card product with a lower rate, but they typically avoid proactively informing their cardholders about opportunities to save money by switching to the lower rate. Hefty balance transfer fees can also pose major roadblocks for consumers to take their business elsewhere, which can impede competition.

I’m looking forward to hearing from our witnesses today to better understand more about credit card rewards and airline frequent flyer miles programs. This will help to inform actions that the CFPB and Department of Transportation may take to protect people’s points, to stop bait-and-switch scams, and to promote a fair and competitive market. Thank you.

The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces Federal consumer financial law and ensures that markets for consumer financial products are fair, transparent, and competitive. For more information, visit