December 2, 2023


The proposed Credit Card Competition Act is drawing airline frequent flyer programs tied to credit cards into the fracas over whether the bill should be passed.

Sens. Dick Durbin and Roger Marshall, who are sponsoring the CCCA, wrote a letter Monday to the heads of the U.S. Department of Transportation and the Consumer Financial Protection Bureau calling on those agencies to dig into “unfair, abusive, and deceptive practices” happening in the frequent flyer programs.

The senators said the airlines that run those programs have teamed up with credit card issuers to market certain rewards for consumers using the cards, but then have changed their programs’ rules to shortchange the frequent flyer members.

“There are troubling reports that airlines are engaged in unfair, abusive, and deceptive practices with respect to these loyalty programs,” the Monday letter to Transportation Secretary Pete Buttigieg and CFPB Director Rohit Chopra said. “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.”

Durbin, a Democrat from Illinois, and Marshall, a Republican from Kansas, have teamed up in an escalating battle against the bank interests to get a vote on the CCCA bill, which would require the banks that issue credit cards to ensure merchants can route credit card transactions over networks other than Visa and Mastercard. The senators contend that Visa and Mastercard operate a duopoly that drives up credit card processing costs for merchants and consumers.

Interest groups representing the banks and other financial institutions, as well as the card network companies, are fighting against the legislation, while those representing retailers and other merchants are backing it.

The bill, aimed at spurring more competition in the credit card network arena, failed to pass in the prior congressional session so the senators reintroduced it this year. They have tried to attach the bill to larger pieces of legislation, but have so far not been successful in their drive for a full Senate vote on the legislation. The bill has been introduced in the House as well, but has similarly limited headway there.

The proposed law, if enacted, would only apply to about 30 of the biggest U.S. banks because financial institutions with less than $100 billion in assets would be exempt.

The senators noted in their letter that millions of Americans use the frequent flyer programs to accumulate points by spending on the credit cards, putting them at risk of losing benefits if programs aren’t providing promised value. They asked the Transportation Department and CFPB to respond to a series of questions about the programs.

Durbin has crusaded for years against the card networks, always seeking to spur more competition in the industry. He also shepherded legislation restricting debit card interchange fees more than a decade ago, ultimately getting that legislation passed as part of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act.

In their campaign to pass the legislation, Durbin and Marshall, as well as their co-sponsor Peter Welch, a Democrat from Vermont, have railed against the big bank card issuers and card network behemoths Visa and Mastercard in comments made on the Senate floor.

For their part, the card networks have argued that their networks provide fraud protection and cybersecurity services, among other benefits, that offer value to merchants and consumers alike.


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