CFPB Releases Data on Card Deals, Asks for More
January 9, 2014
On the same day that the Consumer Financial Protection Bureau (CFPB) released a report showing a decline in the number of agreements between higher education institutions and credit card issuers, the agency's director, Richard Cordray, called on financial institutions to publicly disclose agreements with colleges and universities related to debit cards, prepaid cards, and other products marketed to students.
The 2009 Credit Card Accountability, Responsibility, and Disclosure (CARD) Act requires the CFPB to submit an annual report to Congress that lists information submitted to the bureau concerning agreements between colleges and universities (including affiliated organizations) and credit card issuers. The law does not reference debit cards or similar products.
While the number of issuers of affinity cards increased from 2009 to 2012, the number of agreements, total accounts open, payments made by issuers to institutions, and new accounts opened all decreased, as displayed in the chart below.
|2012||2011||2010||2009||Net Change 2009 to 2012||Percent Change 2009 to 2012|
|Number of issuers||23||21||22||18||5||28%|
|Agreements in effect||617||796||1,005||1,045||-428||-41%|
|Total accounts open at year-end||1,222,718||1,503,664||1,709,054||2,041,511||-818,793||-40%|
|Payments by issuers||$50,396,103||$62,508,677||$73,459,987||$84,462,767||-$34,066,664||-40%|
|New accounts opened||45,519||43,227||46,385||55,747||-10,228||-18%|
CFPB also reported that 43 percent of card agreements in 2012 were between an issuer and an alumni association. An additional 28 percent were directly between the institution and the issuer. The amount of payments made by issuers to institutions and organizations as a result of the agreements declined from more than $84 million in 2009 to $50 million in 2012, a decrease of 40 percent.
Debit Card Transparency
In his statement releasing the credit card data, Cordray commented, "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." He also asked financial institutions to voluntarily make agreements available on their websites. Using data from a NACUBO survey, the agency has acknowledged that 69 percent of institutions' debit card arrangements are already available to the public.
The CFPB has become increasingly interested in these arrangements. Early in 2013, the agency requested feedback from stakeholders on financial products marketed to students. NACUBO filed comments in response to the request for information and shared the debit card best practices first released in December 2012. Additionally, Anne Gross, vice president for regulatory affairs, participated in the CFPB's "Banking on Campus" forum in September, where she shared NACUBO's perspective on the issue and noted that the association encourages its members to keep students' interest at the forefront. Gross also referenced the NACUBO guidance, which recommends higher education institutions publicly disclose the terms of any agreements with third parties offering financial products to students.