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CFPB Targets ‘Secret’ College Credit Card Programs

The Consumer Financial Protection Bureau has sent warning letters to 17 colleges warning them to improve their presentation and disclosure of credit card agreements sponsored by those colleges.

In a press release offered up on Wednesday (Dec. 16), the bureau said that an investigation it conducted found that those same schools had failed to make the marketing agreements available to the public, as is required by law.

In addition, the CFPB also said it is releasing the annual report it conducts on college credit card agreements, which it said offers up concerns about transparency with those aforementioned accounts. In an effort to promote better protection for students — especially in the prepaid and debit markets — the bureau is releasing a Safe Student Account Toolkit that will help universities avoid pushing cards that have surprise and hidden fees.

As the release noted, roughly 10 million students across the nation attend a school that has a deal in place with a financial institution in which the educational institution helps with or allows the promotion of debit, prepaid cards or both. Those cards often sport a school logo. The schools themselves may get a slice of the revenue generated by the cards.

But many of those same accounts, said the CFPB, have high fees, much more so than those seen with accounts that students could find were they to shop around a bit. This comes despite the 2009 passage by Congress of the Credit Card Accountability, Responsibility and Disclosure Act, which mandates that the issuers disclose to the CFPB the terms of any credit card agreement, the number of cards issued and the compensation received by issuers. The schools themselves are required to keep their agreements public via websites and other channels.

A full 80 percent of colleges did not disclose their contracts on their sites. And two-thirds of colleges surveyed did not provide access to their agreements upon request. The letters sent by the CFPB center on those colleges.

[bctt tweet=”But many of those same accounts, said the CFPB, have high fees.”]

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