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December 15, 2014
CFPB: College credit card agreements down
A CFPB report on college credit card agreements shows a 70 percent decline in such agreements since the Credit Card Accountability, Responsibility, and Disclosure Act was passed in 2009.
The report notes that more than 1,000 agreements were in effect in 2009; as of 2013, there were only 336. Instead, college debit and prepaid card agreements are more common now, with at least 852 schools reporting agreements in 2013.
CFPB raised concerns that debit and prepaid cards "generally have fewer sunshine protections" and that remaining schools with credit card agreements do not, for the most part, make those agreements accessible to students and their families.
CFPB Director Richard Cordray said, "Today, financial institutions are cutting more deals with colleges and universities to market student banking products that require less disclosure. Schools and financial institutions should be upfront on their website with students and their families about whether or not the school is being compensated to encourage students to use a specific account or card product."
In November, CFPB proposed federal consumer protections for the prepaid market that would require market participants to limit consumers' losses when funds are stolen or cards are lost. NAFCU will be issuing a Regulatory Alert on the proposal.
The report notes that more than 1,000 agreements were in effect in 2009; as of 2013, there were only 336. Instead, college debit and prepaid card agreements are more common now, with at least 852 schools reporting agreements in 2013.
CFPB raised concerns that debit and prepaid cards "generally have fewer sunshine protections" and that remaining schools with credit card agreements do not, for the most part, make those agreements accessible to students and their families.
CFPB Director Richard Cordray said, "Today, financial institutions are cutting more deals with colleges and universities to market student banking products that require less disclosure. Schools and financial institutions should be upfront on their website with students and their families about whether or not the school is being compensated to encourage students to use a specific account or card product."
In November, CFPB proposed federal consumer protections for the prepaid market that would require market participants to limit consumers' losses when funds are stolen or cards are lost. NAFCU will be issuing a Regulatory Alert on the proposal.
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