2 US senators are targeting airlines' frequent flyer and loyalty programs
In the latest congressional push dubbed consumer advocacy in the travel rewards credit card space, two U.S. senators are looking into "unfair and deceptive practices in airlines' frequent flyer and loyalty programs," per a joint press release.
On Monday, U.S. Senate Majority Whip Dick Durbin, D-Ill., and Sen. Roger Marshall, R-Kan., asked the U.S. Department of Transportation and the Consumer Financial Protection Bureau how they protect consumers against "deceitful marketing tactics" incentivizing award spending generated from cobranded credit cards.
"There are troubling reports that airlines are engaged in unfair, abusive, and deceptive practices with respect to these loyalty programs," Durbin and Marshall said in a statement. "For example, reports have suggested that airlines are changing point systems in ways that are unfair to consumers, including by devaluing points, meaning it takes more points than initially marketed to achieve the promised rewards.”
Additionally, the senators allege that airline frequent flyer programs "incentivize consumers to purchase goods and services, obtain credit cards, and spend on those credit cards in exchange for promised rewards—all while retaining the power to strip consumers of those rewards at any moment," per DOT rules allowing airlines to change their programs without notice to consumers via their terms of service.
Approximately 30 million Americans, or 1 in every 4 households, have cobranded airline credit cards, per data from Airlines for America, a trade group representing the major U.S. airlines. In 2022, airline credit cards generated $23 billion in economic activity, according to A4A.
In their letter to the DOT and CFPB, Durbin and Marshall also cited the cost of purchasing points from airlines at a higher value than the points are worth themselves while flagging the transaction fee airlines charge for transferring points to partners.
"This means that consumers can spend three cents to purchase a point worth roughly one cent," they said. "This disparity between the value of points at purchase and at redemption can be even more extreme, depending on when, how many, and even where on the website the points are purchased."
A CFPB spokesperson confirmed receipt of the letter and said the agency is "reviewing it."
The joint Durbin-Marshall effort stems from their Credit Card Competition Act, which they introduced in 2022 to inject more competition into the credit card industry to lower the fees merchants pay whenever shoppers swipe their credit cards. The bill would direct the Federal Reserve to require credit card-issuing banks to offer a minimum of two networks for merchants processing electronic credit card transactions, prohibiting a Visa-Mastercard duopoly.
This is not Durbin's first attempt at legislation aimed toward rewards credit cards. In 2011, Congress enacted the so-called Durbin Amendment as part of Dodd-Frank, a series of financial regulations implemented in response to the 2007-2008 financial crisis to prevent future crises. The Durbin Amendment established a fixed fee on debit card transaction processing instead of a fee based on a percentage of the total transaction. In response, banks limited the rewards offered for debit card purchases, effectively ending most debit card perks for consumers.
Opponents of the Credit Card Competition Act have expressed concern about the bill being applied to credit cards in the same way the Durbin Amendment was to debit cards, with credit card companies potentially significantly scaling back or discontinuing rewards programs due to decreased revenue from interchange fees.
"This is no coincidence. It is ... a calculated attempt to try to silence and intimidate any U.S. company or American worker who opposes their harmful legislation," said Richard Hunt, executive chairman of the Electronic Payments Coalition, whose organization has been outspoken against the bill.
Since the 2011 implementation of the Durbin Amendment, card issuers have lost $106 billion in swipe fees from debit card transactions, per the Electronic Payments Coalition.
Spokespersons for Durbin and Marshall declined to comment beyond the press release.
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- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
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| 4X | Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 4X | Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 3X | Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com. |
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Why We Chose It
There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
- 4 points per dollar spent on dining at restaurants worldwide and U.S. supermarkets (on the first $50,000 in purchases per calendar year; then 1 point per dollar spent thereafter and $25,000 in purchases per calendar year; then 1 point per dollar spent thereafter, respectively)
- 3 points per dollar spent on flights booked directly with the airline or with amextravel.com
- Packed with credits foodies will enjoy
- Solid welcome bonus
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
- $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.