A Rewards Crackdown?

Bloomberg Law reported last week that the Consumer Financial Protection Bureau (CFPB) is set to scrutinize credit card rewards. Bloomberg quotes CFPB Director Rohit Chopra as remarking in an appearance at the Brookings Institution that “There’s a lot of concerns about misrepresentations about how those points could be used.”

I am a fan of well-regulated markets, for the most part (more so than many other financial services entrepreneurs.) However, I have no idea what this is about. People love their credit card rewards. I’ve worked professionally in the credit card rewards space for over a decade. As a frequent traveler, I started my personal credit card rewards journey almost twenty years ago. I haven’t heard this particular concern.

I do think there is a lot of nonsense in financial services these days. Cue the eye roll about NFTs, extensive crowdfunding, and all the crypto scams. Add in concerns about Zelle scams, social media scams, and those persistent email scams, and you have a lot you can concern yourself with.

I’ve recently written about the Credit Card Competition Act, which would regulate interchange and would have a follow-on effect that could dramatically reduce rewards. I don’t think this will go anywhere because middle-class and mass-affluent Americans love rewards. This latest remark by the CFPB goes in the same bucket.

In contrast to these statements by Chopra, I would argue that there has never been a time when detailed personal finance advice is more available. Today, specialty finance sites like NerdWallet and most major national news brands run endless personal finance and credit card rewards ads. The banks are already very diligent about reviews here due to previous CFPB actions in the prior decade that led to a crackdown on misbehaving affiliate marketers (causing consolidation in that industry). Why is now the time we’re worried about points misrepresentations? I could be wrong; maybe the CFPB complaint database knows something I don’t, but I also know that consumers never read the details, and many of these complaints are from folks who came up with some idea that didn’t match the program.

The CFPB has a responsibility to protect consumers (it’s in the name!), but there has to be some caveat emptor in there, too.

Universal Parks Card

Universal Studios announced a new Visa Rewards card to be issued by First National Bank of Omaha, the Universal Rewards Plus Visa Signature® Card. The Chase Disney Visa is a very successful product, so I imagine the thinking here is that Super Mario, Harry Potter, or Transformers fans will drive adoption and growth. I don’t think Universal Studios has the same level of fandom that Disney does by any means, although I admit I was surprised this card didn’t exist! Details are limited at this point, but we can expect various card designs, points earning, and redemptions at the parks and, taking a page out of the airline playbook, a VIP Lounge for select cardholders at the Universal theme parks. More to come in 2024.

According to the Internet, this is not the first Universal Theme Parks Card. I’m not familiar with the earlier offering, but you can acquire a t-shirt with it on eBay!

Green Dot Launches a New Debit Card with Stockpile

Green Dot, the bank holding company and technology company, announced a new debit card with Stockpile, an investing app focused on parents and children. The new card joins a bevy of debit cards for kids like Greenlight, Step, Copper, and GoHenry. An interesting tidbit in the release notes is that “Stockpile will be among Green Dot’s first new partners to build and operate from Green Dot’s modernized and cloud-native platform that enables more efficient, customizable, and scalable production and service.” That’s a lot of marketing talk, but I wonder if Green Dot has a new infrastructure rolling out. Green Dot is old by fintech standards (founded in 1999!), and a cloud migration would be long overdue.

More Biometrics Payments

American Express announced that it “ is adding facial and fingerprint recognition to SafeKey to help prevent fraud and create a simple and intuitive online checkout process.” I was curious about this one. How does it work? Amex says:

When you check out online, SafeKey’s technology works in the background to make sure it’s really you using your card, and if needed we’ll ask you to confirm it’s you with a code, app notification – and now, for eligible Card members, face or fingerprint ID. SafeKey is built on technology and authenticates purchases made using American Express Cards online at participating merchants. Fingerprint and facial recognition for SafeKey were developed by using Web Authentication technologies from the FIDO Alliance and World Wide Web Consortium. These technologies create a simpler authentication process with higher security over passwords alone and are supported on all major web browsers as well as iOS and Android platforms.

I think this means it functions similarly to 3D-Secure, sending a push notification to your device and requiring authentication to unlock a cryptographic token on your machine to validate the transaction. Out-of-band transaction validation is good. Using app authentication is better than SMS multi-factor authentication when phone numbers can be stolen. Is this really biometrics, though? It’s a stretch to say that using your FaceID on your iPhone enables your Amex biometrics, but I am all for improving card security.

CardsFTW

Thanks for reading CardsFTW, a weekly debit and credit newsletter by Matthew Goldman. Matthew is the founder of Totavi, LLC, which provides GSD Product Consulting with real operational value. Visit totavi.com to learn more and engage us.

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