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From Banking and Finance Law Daily, December 16, 2015

CFPB grades 17 college credit card disclosures 'incomplete'

By Richard A. Roth, J.D.

The Consumer Financial Protection Bureau has told 17 colleges that they need to do a better job of disclosing their school-sponsored credit card agreements. The bureau’s annual report on college credit card agreements, published on the same day the letters were announced, found wide-spread failure to comply with account disclosure requirements among the 25 largest colleges with active credit card partnership agreements.

The Credit Card Accountability, Responsibility, and Disclosure Act requires credit card issuers to give the CFPB specific information when they have marketing agreements with colleges. This includes the terms and conditions of the card agreements, the number of cards issued each year, and the amount the issuer paid to colleges. Colleges must make agreements available to the public, either by publishing the agreements on the Internet or by making them available on request.

However, according to the CFPB:

  • 20 of the 25 colleges examined for the annual report did not post their agreements on the Internet;
  • only seven of the 20 gave information on how to request a copy of the agreement; and
  • only two of the seven actually provided the agreements when they were requested.

The bureau’s warning letter urges the colleges to post the agreements on the Internet, calling it “the least burdensome and most straightforward means of complying with” the CARD Act. The letter does not, however, explicitly charge that the colleges have violated the law.

Credit card toolkit. The CFPB said that 40 percent of college students attend a school that has an agreement with a financial institution that covers debit cards or prepaid cards. These agreements do not necessarily offer the consumer protections that accompany credit cards.

To address this, the bureau has created a Safe Student Account Toolkit, which it believes will help colleges decide whether to co-sponsor prepaid cards or checking accounts. The toolkit will help colleges compare agreements offered by different issuers and to consider the costs and benefits to students.

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