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The CFPB finds nonexistent problems, threatening services users value

| American Banker

American Banker Op-Ed: The CFPB finds nonexistent problems, threatening services users value

By Richard Hunt

June 24, 2024

The Consumer Financial Protection Bureau recently issued a report to coincide with a politically motivated joint hearing with the Department of Transportation. The purpose? To issue a press release trying to convince people there is a problem with airline and credit card rewards that simply doesn’t exist. But even a cursory look at their report reveals this all to be a farce. Consumers aren’t frustrated. Not even a little. But it’s a politically convenient narrative for the Biden CFPB, cheered on by Senate Judiciary Committee Chair Dick Durbin, Sen. Roger Marshall and their allies who have been attempting to smear the credit card industry in order to promote their legislation.

The new report notes that the CFPB received 1,200 complaints last year involving credit card rewards. In case you were wondering, there are about 336 million people in the U.S., and about 143 million own a rewards credit card. The share of those who filed a complaint in 2023 is 0.0008%. To give you another frame of reference, there were 1.3 million complaints to the CPFB last year. The idea that people are encountering “numerous problems,” and that credit card companies are doing a “bait and switch” is numerically laughable.

So how did the report come up with the conclusion that rewards programs are a problem? Well, that is a great question. Their analysis is vague at best, noting they looked at “several hundred consumer complaints” and found four problematic themes. Why those several hundred? How many hit upon each theme? No idea, because they declined to share their methodology. It’s impossible to tell if their themes are based in reality.

The report also claims that rewards programs are too complex for people to understand. Consumer research shows people are happy with credit card rewards and find them easy to use. Credit card issuers offer numerous options when it comes to rewards: miles, cash, gift cards and more. A recent study from the Electronic Payments Coalition showed people at all income levels use and value these rewards, especially cash-back. There’s a reason these programs are continuing to grow, and consumers have more options than ever. The CFPB’s own study from February said during the first half of 2023 there were 643 credit cards offered by 156 issuers.

So why is the CFPB out to demonize credit card rewards? The agency’s longtime fan, Sen. Durbin, and newfound supporter, Sen. Marshall, called for a CFPB investigation into this. Conveniently, Sen. Durbin and Sen. Marshall also authored a bill that will change how credit card payments are processed. This bill will put more money into the hands of their political supporters, namely corporate megastores like Target and Walmart. Target, Walmart, Home Depot and others have been plotting with Senator Durbin for eons, and now with Senator Marshall, to push their agenda. Rather than having their own rising prices scrutinized, they’ve taken the approach of going after the financial system, and their political friends are happy to do their dirty work.

This bill will come back to bite them in the end, as it allows stores to circumvent the safe and secure payment systems they need. You would think in the decade since the infamous Target data breach that affected 41 million people that they would have realized the value of data security, but, alas, they’d rather cut corners with the help of the Senate and their bureaucrat allies.

Senators Durbin and Marshall will not stop using their power to weaponize the government against their political enemies. Their primary targets are anyone who supports the current payments system — card networks, credit unions and community banks to name a few. But that list is expanding. This recent hearing and report were political retribution against their bill’s broader opponents. The hearing dragged the airline industry into it, scrutinizing their credit card rewards programs. This of course happened after the airlines released a massive study showing that Sens. Durbin’s and Marshall’s bill will jeopardize $23 billion in economic activity and make airline rewards programs vanish.

The CFPB has proven if they can’t find problems, they’ll make them up. Such is the nature of politics these days. It will take consumers learning their rewards programs may disappear to stop this madness. Tell your senator to oppose Durbin and Marshall’s new credit card mandates.

Richard Hunt Executive Chairman, the Electronic Payments Coalition

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