Defending Your Factors: New York’s Credit score Card Reward and Loyalty Program Regulation Is Set to Take Impact

Simply in time for the vacation purchasing season, New York Senate Invoice No. S133B takes impact on December 10, 2022. Final yr, Governor Kathy Hochul signed the invoice, which amends New York’s Common Enterprise Regulation to offer shoppers a set grace interval to make use of their bank card reward factors when sure adjustments (e.g., modification, cancellation, closure, or termination) are made to a “reward, loyalty, or different incentive program.”

Beneath the brand new regulation, bank card corporations should “inform bank card holders inside 45 days if their account or rewards program is modified, cancelled, closed or terminated. Except the shopper has engaged in fraud or misuse of the account, holders will then have 90 days to redeem or alternate their rewards factors.”

The regulation defines “factors” broadly, as “items that may be collected in an account in reference to a bank card reward, loyalty, or different incentive program, sometimes called factors or for sure travel-related rewards as miles, that are redeemable, fungible, or in any other case exchangeable, in complete or partly, for rewards[.]”

Bank card loyalty applications is usually a vital consider how shoppers determine which bank card to make use of. In response to a 2019 Client Monetary Safety Bureau (CFPB) report, round half of shoppers with subprime credit score scores and two-thirds of these with near-prime credit score scores make purchases on a rewards-based bank card; the extra a buyer understands how their reward program works, the extra possible they’re to spend.

Most bank card loyalty program agreements embrace provisions specifying that cardholders don’t have any possession rights within the factors they earn by way of purchases with their playing cards and supply that this system might be modified and/or terminated, and factors can expire, at any time and with out discover.

The brand new regulation adjustments this in New York, nonetheless, and offers that neither the bank card firm nor its prospects can disclaim any rights, and any try to take action shall be void as opposite to public coverage. Subsequently, bank card corporations providing loyalty and reward applications that haven’t already carried out so ought to overview their program phrases intently for compliance.

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The authors thank Jay V. Prapaisilp, a regulation clerk in Venable’s Washington, DC workplace, for his help in writing this text.