The federal Consumer Financial Protection Bureau on Tuesday asked financial institutions to disclose their agreements with colleges and universities to market debit cards and other products to students.
By law, banks and other financial institutions only have to make the disclosures about college credit cards. The financial institutions must state how much they pay schools to let them be the primary provider of credit cards on a campus.
“Students and their families should know if their school, whether well-intentioned or not, is being compensated to encourage students to use a specific account or card product,” CFPB director Richard Cordray said in a statement. “When financial institutions secretly give kickbacks to schools, they are engaging in risky practices.”
Knowing the arrangement could prompt students to check to shop around to get the lowest charges, as CFPB recommends in an online guide.
Many colleges and universities have arrangements with financial institutions for deposit accounts, prepaid cards, debit cards, and other products, CFPB said in a press release. The consumer bureau said its initial findings based on a public forum show financial marketing partnerships have shifted to student checking accounts and debit or prepaid cards, and that these outnumber college credit card agreements.
The CFPB’s annual report on college credit card agreements, also released on Tuesday, showed they declined by 23 percent from 2011 to 2012.