CFPB Releases Report on College Credit Card Agreements

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The CFPB released its annual report on college credit card agreements to Congress. Section 305 of the CARD Act requires credit card issuers to annually submit to the CFPB the terms and conditions of any college credit card agreements in effect at any time during the preceding calendar year between the issuer and an institution of higher education or a foundation affiliated with an institution of higher education (e.g., fraternities, sororities, and alumni associations). The CARD Act also requires the CFPB to submit an annual report to Congress and make the information submitted by credit card issuers available to the public. Credit card issuers are required to submit: (1) the number of credit card accounts covered by the agreement; (2) the amount of payments made by the issuer to the institution or organization during the year; (3) the number of new college credit card accounts covered by the agreement opened during the year; and (4) any MOUs between the issuer and institution that directly or indirectly relates to any aspect of the agreement.

In conjunction with the release of the report, the CFPB requested that financial institutions publicly disclose their agreements with institutions of higher education used to market other financial services products to students including debit and prepaid products. The report noted that the number of agreements decreased by 23% from 2011 to 2012 and fewer new college accounts are being opened. Notably, the CFPB’s initial findings concluded that financial product marketing partnerships between credit card issuers and institutions of higher education shifted to student checking and debit and prepaid card products and, as a result, such partnerships outnumber college credit card agreements.

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this informational piece (including any attachments) is not intended or written to be used, and may not be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

Topics:  CARD Act, CFPB, Colleges, Credit Cards, Students, Universities

Published In: Consumer Protection Updates, Finance & Banking Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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