Colleges have turned a blind eye to aggressive and frequently deceptive
credit card marketing on their campuses -- and sometimes even profit
from it, a consumer group said Wednesday, calling on schools to curb
the practices.
Universities commonly allow credit card companies to set up booths in
campus bookstores, stuff advertisements in college "welcome" packets
and post fliers in cafeterias. Some colleges, in exchange for a fee,
give some banks the names, phone numbers and e-mail addresses of
students to help in the peddling of plastic. The fees typically go to
support student activities.
The consumer group, U.S. PIRG -- teaming up with the American Council
on Education, a higher-education lobbying group, and the National Assn.
of College and University Business Officers -- wants college
administrators to take an active role in determining the type of credit
card marketing allowed on their campuses, even to the point of
discouraging issuers from including certain controversial terms in card
agreements.
The coalition also is calling on schools to boost financial literacy
efforts, prohibit the use of gifts as inducements in campus marketing,
restrict the appearance of card-marketing posters and fliers on campus,
block the dissemination of student lists and stop campus groups from
striking deals with lenders.
"Colleges know that students come to our campuses with very little
financial savvy," said Becky Timmons, assistant director of government
affairs at the American Council on Education. "The changes they are
experiencing at that time can make them vulnerable to undertaking
credit that they will later come to regret. We see this [campaign] as a
way that colleges can help their students to become more sophisticated
consumers."
Ken Clayton, managing director of credit card policy at the American
Bankers Assn., said the group supported financial education, but said
it was inappropriate to dictate the terms of card agreements and the
way they're marketed.
"We don't think that giving somebody a free T-shirt is going to make
them act irresponsibly with a card," he said. "That doesn't give
students enough credit."
Launching what it described as a counter-marketing campaign, U.S. PIRG
set up booths at 40 campuses nationwide Wednesday to parody the way
cards are marketed to students. Wearing T-shirts and caps promoting the
fictional credit card "Feesa," protesters gave out lollipops emblazoned
with the message "Don't be a sucker."
"We believe that college students are victims of unfair credit card
marketing practices that we think we can stop," said Ed Mierzwinski,
consumer program director for U.S. PIRG, a federation of state Public
Interest Research Groups. "Colleges can change their ways, whatever
their previous motive."
The credit card provisions that U.S. PIRG opposes include so-called
universal default rules that allow card companies to raise a borrower's
interest rate for a credit transgression with other lenders, low
"teaser" rates that quickly convert to high rates, and penalty fees and
rates that can boost the cost of credit retroactively -- often when the
cardholder is already financially stretched.
