On December 16, the CFPB released a data spotlight examining the potential link between a rise in cash advance fees charged for credit card transactions and the legalization and expansion of sports betting in 38 states. The report explained that many prominent credit card issuers categorize online sports betting transactions as cash advances, leading to consumers being charged fees and accruing interest pursuant to their cardholder agreements. The report focused specifically on data from Kansas and Ohio showing that the legalization of sports betting coincided with an increase in cash advance fees. The report compared cash advance fee data in these two states with comparable data from Missouri, a state that has not legalized sports betting, explaining that the data showed the incidence of cash advance fees were comparatively low in Missouri, suggesting a correlation between the legalization of sports gambling and cash advances.

The CFPB’s spotlight report stated that consumers may be caught off-guard by these cash advance fees for sports gambling transactions, noting that some consumers described the fees as “mysterious,” “sneaky,” or “unfair.” The report asserted that disclosures from credit card issuers regarding these fees are often inconsistent and unclear, and the specific policies of credit card issuers regarding cash advance fees may change over time. The CFPB also highlighted that the applicable cash advance fees may be relatively high, noting that based on a review of card agreements from seven issuers, cash advance fees are often the greater of $10 or 5 percent of the transaction amount, with a common APR of 30 percent.

Furthermore, the report noted that while some states prohibit the use of credit cards for funding betting accounts, where allowed, sportsbooks often provide limited disclosure about potential cash advance fees, contributing to consumer confusion. The CFPB suggested that state gaming regulators consider restricting the use of credit cards for online sports betting or mandating clearer disclosures. The CFPB also noted that it intends to continue investigating how credit card issuers communicate cash advance fees and their effects on consumers’ credit profiles.