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Wednesday, December 16, 2015

CFPB Warns Colleges about Secret Campus Credit Card Contracts

The CFPB sent warning letters to 17 colleges directing them to improve disclosure of school sponsored credit card agreements. These schools failed to make marketing agreements available to the public, either on their websites or by request, as required by the CARD Act. The CFPB reviewed a sample of 25 of the largest colleges with active credit card partnership agreements to assess compliance with these requirements. Of the 25 schools reviewed, 20 colleges did not post agreements on their website. Furthermore, of these 20 schools, only 3 provided agreements upon request.

CFPB Director Richard Cordray said:
History tells us that when schools and financial institutions get together behind closed doors, students can pay a steep price. The Bureau will continue to promote and enforce transparency across this market and stands ready to see that schools do the right thing on behalf of their students.

Credit cards offered in conjunction with colleges, universities and affiliated organizations have continued to decline since the CARD Act was enacted in 2009, the CFPB said in a report. The number of agreements between issuers and institutions has fallen 65% since then, while the total number of accounts has fallen by 58%. Although new account figures continue to grow — by 12% overall since 2009 — the bureau noted that most of these new accounts fell under agreements between issuers and alumni associations and thus do not likely affect students.

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