Over the past year, the mutually beneficial relationship between a number of card issuers and comparison sites has turned icy, with heated conversations between the parties, banks cutting off ties with some sites and, in one case, a lawsuit.
Interviews with a dozen card-comparison sites reveal that as card-issuer pressure ramps up—with increased requests for sites to delete or change some information—most sites are giving in to their demands.
At stake for consumers is potentially misleading and less complete information. Consumers consult credit- and prepaid-card comparison websites to find the cards with the lowest fees and the best rewards programs. Instead, they’re increasingly seeing the fees lenders want the sites to show rather than the fees they’re likely to incur. And as lenders cut off ties, some no longer want their cards shown on these sites at all.
Lenders say they’re taking these steps largely out of concern that regulators will sanction them if their card information on any of these sites is found to be inaccurate, unclear or in any way misleading to consumers. Regulators have recently taken more steps to address this issue.
Lenders say the Consumer Financial Protection Bureau has expressed concern about the banks’ relationships with the third-party credit-card sites. “The Bureau is aware of these websites and will continue to look closely at how credit cards are marketed [on these sites] to monitor for consumer harm,” said a CFPB spokeswoman.
Separately, the Office of the Comptroller of the Currency, an independent bureau within the U.S. Treasury Department, released guidelines last fall requiring banks to take extra efforts to manage risks associated with any third-party relationships, in part by monitoring the third party’s activities and having plans in place to terminate such relationships if needed.
And check this out:
These sites are beholden to the card issuers for revenue. At least six of the 19 most well-known sites show credit cards only from lenders. Another six show mostly advertiser cards, and those credit cards receive preferential treatment, often showing up first on searches or in editors’ best picks. Some of these sites also provide additional services beyond credit-card comparison tools, such as bank account comparison options and credit-monitoring tools. Some sites receive a small portion of their ad revenue from banner ads from lenders and nonlenders. The sites don’t charge consumers for their card-comparison services.
One of the nice things about not relying on affiliate revenue is the freedom it affords. I can say anything I darn well please, and that’s a nice feeling. Other sites, not so much.
Many sites declined to comment on the record for this article, saying that they have signed agreements with the lender partners not to discuss their relationships. They say, however, that they give in to lender demands largely out of fear of losing revenue and shutting down.
One of the things that’s helped keep this practice in the shadows is the secrecy agreements. A lot of customers would be surprised to find out how much bloggers and their websites make from affiliate revenue.
The spokeswoman for American Express said the company recently conducted an analysis of its relationships with card-comparison sites and decided to significantly reduce the number of sites it works with. She added, “We don’t think it is appropriate for sites to award ‘best’ rankings in return for advertising payments or provide assessments of products without letting consumers know about the relationship between these sites and their advertisers that issue them.”
Good for you, Amex! Though there are still affiliate sites of yours that do this.
Repercussions can be severe when a site tries to push back against lender demands.
First Premier filed a lawsuit earlier this year against CardHub.com parent Evolution Finance Inc. and its chief executive, alleging trademark infringement for displaying the bank’s name and linking to its website. The suit calls for all First Premier content to be taken down. The lender also filed a motion for a preliminary injunction with the same request.
…Talks to settle the case failed this month, and Evolution Finance filed a motion to dismiss the suit, citing First Amendment protection, said Deepak Gupta, the lead attorney representing Evolution Finance. The lender has until Aug. 28 to respond. Consumers with low credit scores, who have few credit-card options, should be able to see the card alongside the other credit cards that may be available to them, said Odysseas Papadimitriou, CardHub’s CEO.
My readers may recall that Capital One tried something similar with Saverocity before tucking its tail between its legs and running.
Interesting times for the travel / card-pump business model, yes?