Victory! CFPB Warns Colleges About Secret Credit Card Deals on Campus
By Suzanne Martindale on Wednesday, December 16th, 2015
Good news for college students – the days are numbered for colleges and universities cutting secret deals with banks to offer financial products on campus.
We’ve told you about these deals, and our investigation this spring to get public information about campus credit card agreements. Our secret-shopper investigation found that it was difficult if not impossible to get information about these school-bank contracts to market credit cards to students on campus. In fact, it was so difficult to get a straight answer from all the campuses we called that we told the Consumer Financial Protection Bureau (CFPB), letting them know that schools may be violating the law and asking them to investigate further.
Sure enough, the CFPB answered our call – today, the agency announced that it has sent warnings to 17 schools around the country, directing them to improve their disclosure of school-sponsored credit card agreements. The CFPB did its own secret-shopper investigation, looking at 25 of the largest colleges with active credit card partnership agreements to see if they complied with the law requiring them to make the contracts public. They found that only 5 of those schools posted the contracts online; of the remaining 20, only 3 ended up providing the secret shoppers the information they requested.
Federal law requires schools to make these marketing contracts available to the public. We applaud the CFPB for making sure that schools follow the law, and we urge them to require all colleges to post these agreements online, where everyone can see them! We think the public has a right to know whether these contracts are designed to give students and alumni a good deal, or simply to help the schools’ bottom lines.