We are looking into a rewards program that is tied to our MasterCard debit cards. I'm just curious if anyone else offers something like this and what steps, compliance wise, did you take prior to starting the program? One of my first thoughts was that the cash back would be considered income and if the amount earned is $600 or more then we would be required to provide a 1099 MISC. However, our vendor states that the rewards are not considered income because they are essentially "coupons". I'm a little confused on this. I believe the way it works is that offers and rewards are based on the account and not the debit card associated with the account. An offer will be sent to an account and the customer can claim the offer by using their debit card - for ex: an offer states that if the customer spends $15 then they will earn $3.

It still seems to me that they are earning cash back - can someone explain this to me? Also - do we need to include a separate disclosure on the program with each debit card issuance or account opening?

The powers who be are pretty adamant about moving this along pretty quickly and getting it rolling, however, I've pretty much just found out about it.....

Any help on these programs would be greatly appreciated!

Thanks!

Starting a rewards program is like slapping a great big UDAAP bull's-eye on the bank. While the powers that be want to move forward quickly, the bank needs to make sure that it fully understands the program and that a very thorough vendor due diligence process is followed - including interviewing other clients. You need your consumer disclosures to be exceedingly clear.

I can't offer any thoughts on the actual program, as if you don't understand it, I am not sure how any of us would.

Well, I was really just wondering if anyone was participating in a program where the cash back rewards were not considered income because they were considered coupons? I was a little confused about this part of the program.

Also - because the program is available to any account holder who has a debit card - would the disclosures on the program need to be added to our TISA disclosures? Or do we just need to make sure we are providing the information along with our other disclosures?

I'm not trying to be difficult, I just want to be sure I understand everything we need to do because from my understanding this program is going to be happening soon. I've been doing as much research as I can on these programs.

Thanks Randy!