California Consumer Law Blog

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."

Colleges have turned a blind eye to aggressive and frequently deceptive credit card marketing on their campuses -- and sometimes even profit from it. 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.

"Colleges know that students come to our campuses with very little financial savvy," said Becky Timmons, assistant vice president for government relations 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."

Especially egregious to students are credit card provisions which 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.

The credit card companies are pushing something that students can't refuse...easy credit at time either they have never been on their own or have limited funds to cover their expenses (necessary or not.) Often students get themselves into a financial mess with late payments and late charges at a time early in their credit history. Their lack of financial savvy and mistakes mad with credit cards will remain with them many years after they leave college and need good credit to buy a car or house. While I don't disagree that students should learn to use credit wisely, credit card companies should take some responsibility and not be extend credit to those who lack the ability to repay their debts. And since we know corporate America won't do the right thing, college admistrators have to protect their students and curb credit card companies activities' on their campuses.

College administrators must 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. There is also a great need for 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.