The recent change in policies of credit card companies about frequent flier miles has caught the attention and ire of several US legislators. One Democrat lawmaker, Senator Charles Schumer, ordered for an investigation into this recent practice of card issuers of penalizing late payers by slashing their miles rewards and even cancelling them.
He believes that there is a degree of deceptiveness into this issue and that he believes that the consuming public should not be used by companies to shore up more profits. He said that as of date, millions of miles have been confiscated and cancelled by card issuers and that many individuals were caught flatfooted with the sudden change in rewards policies. He added that most cardholders worked hard for their flier miles points and that companies should not be unscrupulous in denying what is due to its customers.
Schumer also stated that in this time of year, where people are expected to travel a lot, stripping people off of their frequent flier points is cruel and severe a measure. He has already directed the Department of Transportation to look deeper into this issue and to verify if the credit card companies concerned are guilty of employing deceptive business practices. He also ordered them to draft some regulatory measures regarding the extent a bank can withhold flier miles points and the reasonable timelines in distributing notices to consumers.
Industry experts said that the practice of cancelling or withholding reward miles by banks is nothing new. However, what's unusual about the current trend is the severity of the regulations. For example, the validity of rewards miles has now been cut unreasonably short. They cited cases of some companies that would only recognize reward miles that are below a year old and that if their customers would like to redeem their expired miles they would have to pay a reinstatement fee. Other banks have a longer holding period of 1-1/2 years, but it is still considered historically to be too brief a period.
Critics lament the fact that credit card companies are insensitive to the American public's plight. The current weak economic prospects of consumers are not helped by companies imposing stiff and unjust penalties. Even normally prompt payers who unintentionally miss a single payment are not spared by this current ruling.
In January of next year, American Express will implement their new guidelines on frequent flier miles. Cardholders who miss a payment would be penalized by a forfeiture of their miles points. They will only be able to restore their miles earned if they settle all of their outstanding debts and pay a reinstatement fee of $29.