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This article appears in the October 2009 issue of Cards&Payments.
The consumerism movement, which began in the 1950s as a reaction against predatory business practices, reached its zenith in 1962, when U.S. President John F. Kennedy outlined four rights to which all consumers were entitled.
Those four rights, later expanded to six, became the foundation of the Consumer Bill of Rights, which was adopted as a United Nations resolution in 1985. The moral: If businesses do not police themselves, eventually the government will do it for them.
Today, newspapers and blogs are filled with tales of cold-hearted bankers raising interest rates, increasing fees, slashing credit limits and gutting reward programs. So how do you combat this negative image? Take a page from JFK and proclaim a Reward Cardholders' Bill of Rights. If you did, it might look something like this:
Right to Be Safe
When Kennedy articulated this basic consumer right, he was referring literally to the right not be killed or injured by the products we buy. For reward cardholders, this right refers to the fundamental right to privacy and data protection. Consumers must have full assurance that their credit card numbers, transactional information and personal details are secure from fraud and will not be subject to improper use by the issuer or program partners.
Right to Choose Freely
This right was JFK's warning against the rise of monopolies. For reward cardholders, this right assures consumers that issuers will not enact hidden or onerous fees or slash the value of reward programs secretively or arbitrarily, but rather will place such decisions squarely in the hands of their cardholders. Give your cardholders the choice of participating in a rich rewards program, provided that they are willing to pay an annual fee or a (slightly) higher interest rate, or to opt out of rewards altogether in exchange for a no-fee card with a low annual rate. Give them the choice of reward model—cash back versus points and miles, for example—and price participation accordingly. Capital One has taken an early lead on this right with their Card Lab service; other issuers would do well to follow suit.
Right to Be Heard
Kennedy believed consumers had a right to have their concerns and complaints heard—and if the private sector would not hear complaints, Kennedy warned, then the government would. Likewise, reward cardholders have a fundamental right to clear lines of communication with issuers to understand terms and conditions, earning options and data usage, and to understand to which communications streams they are opting in. Consumers should also expect that the purchases they make and the preferences they indicate will result in relevant, value-added offers and messages from issuers.
Right to be Informed
When consumers purchase products and services, JFK argued, the onus is on the seller to clearly articulate contract and warranty terms, service fees and any changes to service agreements. Reward cardholders should expect the same rights when it comes to understanding any changes in program earning rates, expiry dates, redemption fees, etc. Reward card holders can be surprisingly forgiving about program changes provided that they are treated with respect. Issuers who approach program changes with full transparency will enjoy stronger cardholder relationships in the long run.
Right to Education
This right was Kennedy's admonition to businesses to help their customers make informed purchase decisions without being subject to misleading or deceptive sales practices. Fortunately for consumers, the wired marketplace now makes self-education a breeze. Any potential reward card holder easily can compare his reward card's value to competing card products with a few clicks of the mouse.
But in today's tough economy, consumers also will look for issuers that can help them make informed financial decisions about the types of rewards they can earn and the trade-offs between revolving their balances versus paying them in full. Issuers that are sound financial partners with their cardholders will earn both their loyalty and their trust.
Right to Service
Reward card holders have a fundamental right to choose their preferred channel of customer service and to receive prompt, courteous answers to their questions and complaints.
If customer-service benefits are tiered based on value—for example, driving all basic cardholders to an issuer's Web site for service while providing a dedicated customer-service line for Platinum members—the issuer should be certain cardholders understand how they can earn their way to premium service levels.
Rewards credit card issuers cannot repair a damaged relationship with their cardholders overnight. But by adopting this Reward Cardholders' Bill of Rights, they certainly can extend the first olive branch. CP
Rick Ferguson is editorial director of LoyaltyOne, a global provider of loyalty marketing services. He can be reached at 513-248-5910.
