Credit card issuers and service providers have guidance from a new CFPB circular outlining how they may potentially violate federal unfair, deceptive, or abusive acts or practices (UDAAP) prohibitions in the design, marketing, and administration of rewards programs.

Issued Wednesday, the circular notes that violations can occur when companies:

• Deflate the value of earned or accrued rewards; 
• Revoke, cancel, or prevent receipt of rewards based on “buried or vague” conditions; or 
• Fail to deliver promised benefits, including due to system failures (even from merchant partners or vendors).

Along with the circular, the CFPB announced the launch of Explore Credit Cards, a tool that helps consumers compare options in the credit card market. The tool highlights the favorable interest rates offered by credit unions specifically noting that credit unions and small banks charge interest rates 8 to 10 percentage points lower than the largest issuers, saving consumers $400 to $500 per year.

Apple Federal Credit Union President/CEO Andy Grimm testified at a joint CFPB/Department of Transportation hearing in May on credit card rewards in May.

During the event, CFPB Director Rohit Chopra said  credit unions “are an important part of the credit card market,” especially due to the competition they provide to the larger issuers.

A CFPB report issued in conjunction with the hearing showed credit unions offer lower interest rates than the largest credit card companies.

Read the full circular here.