Forthcoming New York Law Expands Protections For Credit Card Reward Points

By Jeremy M. McLaughlin and Joshua Durham

Last year, on December 10, 2021, New York governor Kathy Hochul signed into law Senate Bill S133B, which is set to take effect on December 10, 2022.  Among other things, it provides a 90-day grace period for the use of credit card reward points before an account is modified, cancelled, closed, or terminated.

Specifically, the bill amends New York’s general business law to make it unlawful to have any “expiration, forfeiture or cancellation” of credit card reward points prior to the 90 day grace period. The bill also mandates that if any credit card account or rewards program is modified, cancelled, closed, or terminated, the cardholder must be provided notice from the issuer as soon as possible, and at most “within forty-five days of such cancellation, closure, termination or modification.”

The bill’s sweeping breadth encompasses many, if not most, credit card rewards programs. Importantly, neither consumers nor credit card companies may disclaim the rights granted in this bill, as any attempts will be deemed void as contrary to public policy.

The bill’s noted purpose was to establish more consumer protections around credit card rewards programs. According to the legislature, a common provision in rewards programs “allows the credit card issuer to cancel all accumulated rewards points or other rewards benefits upon the closure of the credit card account, without affording the credit card holder any opportunity to use accumulated points.” As reward points are understood by consumers to be part of a credit card program, regardless of how they may be described in a card agreement, the legislature determined that canceling points without notice and without a grace period “constitutes a failure by the issuer to honor consumers’ understanding” of their agreement.

The law does not contain any specific penalty provisions. But the law amends New York’s general business law, so both private plaintiffs and the state attorney general could have standing to bring actions to ensure compliance.