Push for Limits On Credit Card Marketing to Students

February 6, 2009

credit cardBy Jim Ross:

College students who’ve gotten a bad deal on credit cards from their schools have an ally trying to change the law.  Florida colleges and their fundraisers will have to stop helping big banks pitch credit cards to their students, if a state Senator gets his way.

Carey Baker, a Republican from Eustis, last month filed legislation requiring public and private colleges from selling, giving or transferring student contact information to credit card issuers without  written consent from each student.

Florida legislators meet for two months beginning in March to debate legislation and enact a state budget.

The Consumer Warning Network disclosed in July that fundraising groups for some Florida colleges and universities pocketed a piece of the action on every credit card transaction under secret marketing deals with the Bank of America.

Attorneys General in Florida and New York are investigating cozy relationship between credit card companies, universities and university-affiliated fundraising groups that result in higher interest rates to students.

At Florida State University, for example, students are subsidizing the school’s big time athletic program through an exclusive credit card that charges up to 3 percentage points more than the competition.

The school and its fundraisers agreed to higher interest rates in a deal designed to funnel at least $10.7 million to the FSU athletic program.

Baker’s bill would prohibit public or private schools, colleges or universities and their fundraising groups from entering into any deal with credit card issuers “to offer or facilitate the marketing of credit cards to undergraduate students.”

Schools that don’t toe the line would be violating the state’s unfair and deceptive marketing laws. Florida can penalize violators up to $10,000 for each violation.