Credit card companies with reward programs and store credit card issuers could be breaking the law, said the Consumer Financial Protection Bureau (CFPB) Wednesday.

"Large credit card issuers too often play a shell game to lure people into high-cost cards, boosting their own profits while denying consumers the rewards they’ve earned," said Rohit Chopra, director of the CFPB.

The timing of the CFPB warning is no coincidence. Consumers may be particularly vulnerable during the year-end shopping and travel seasons peaking in November and December when retail sales volumes and promotions are high.

The CFPB found that some credit card companies could be engaging in illegal bait-and-switch programs by offering rewards programs to entice consumers to sign up for a credit card, then later devaluing points and airline miles earned.

"When credit card issuers promise cashback bonuses or free round-trip airfares, they should actually deliver them," said Chopra.

The CFPB also warned that store credit cards may charge significantly higher interest rates than traditional credit cards.

Companies Made Promises of Points and Rewards Then Didn't Deliver

More than 90% of credit spending has been on rewards credit cards since 2019, the CFPB said. Consumers are encouraged to use rewards cards with promises of sign-up bonuses such as cash, points, and miles in addition to rewards for certain types of spending.

However, consumers reported that their credit card companies had deflated the value of their accrued rewards, "resembling a bait-and-switch scheme," the CFPB said.

Credit card companies may also cancel customers' earned rewards by using unlawfully buried fine-print disclaimers or vague contract terms. In 2023, the CFPB ordered Bank of America to pay back $100 million to customers, and in 2012 ordered American Express to pay back $85 million.

Under federal law, credit card companies with reward programs must ensure that customers can collect their rewards, even if a system failure prevents consumers from redeeming them.

This is the CFPB's second warning against credit card reward programs. In May, the bureau held a hearing with the U.S. Department of Transportation and issued a report outlining the host of issues faced by consumers.