WASHINGTON — A legislator well known to (and not popular with) credit unions, Sen. Dick Durbin (R-IL), is introducing legislation that would expand federal oversight of airline-branded credit cards and frequent flyer programs, proposing new authority for the Consumer Financial Protection Bureau, Department of Transportation and Federal Trade Commission to police the programs.
Durbin said the bill is aimed at increasing transparency and consumer protections in a fast-growing segment of the payments and travel industries that has drawn heightened scrutiny from lawmakers and regulators.
Airline-branded credit cards and loyalty programs, which allow consumers to earn miles or points for travel and other purchases, have become a major revenue source for airlines and their banking partners. Critics, however, have raised concerns about devaluations of rewards, limited availability of seats for redemption, and what they describe as confusing or misleading terms.
New Authority to CFPB
Under Durbin’s proposal, the CFPB would be granted authority to supervise and enforce consumer protection standards related to airline credit card practices, including marketing, fees and disclosures. The Department of Transportation would oversee airline loyalty programs more directly, while the FTC would be empowered to pursue enforcement actions against unfair or deceptive practices tied to rewards programs, according to Durbin.
In a statement accompanying the legislation, Durbin said consumers often face “bait-and-switch tactics” when redeeming points or miles and lack clear information about how rewards are valued or changed over time.
What Would be Required
The bill would require clearer disclosures on how rewards are earned and redeemed, as well as advance notice of any significant changes to loyalty programs. It would also direct regulators to establish standards to ensure rewards are not unfairly restricted or devalued without transparency.
The proposal comes amid broader bipartisan interest in credit card competition and consumer protections.
Durbin also continues to back the Credit Card Competition Act, which would affect interchange and which is strongly opposed by credit unions.
Durbin
