WASHINGTON (12/18/13)--The Consumer Financial Protection Bureau called on financial institutions to be more transparent about commercial deals with colleges and universities.
The request, which focuses on debit and prepaid cards and accounts marketed toward students, came on the heels of an annual report to Congress about similar arrangements over credit cards.
"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," said CFPB Director Richard Cordray. "When financial institutions secretly give kickbacks to schools, they are engaging in risky practices."
The CFPB concluded in September that details about college and university-sponsored accounts are often difficult to obtain. Consumers wanting details about these deals may only find them after filing requests under state open records laws.
The agency's annual report on arrangements between credit card issuers and higher learning institutions found that such deals have declined since 2009, when Congress mandated the disclosure of details surrounding them. In 2009, there were 1,045 agreements that saw universities and colleges take in more than $84 million for over two million accounts. In 2012, there were 617 agreements worth over $50 million for over one million accounts.
The CFPB said that financial institutions "have shifted" to student checking and debit and prepaid card products, and that these agreements now "outnumber college credit card agreements."