Today, February 22, 2010, Pennsylvania Congressman Patrick Murphy (D-8th District) announced changes to the Truth in Lending Act that will help shed light on the business and marketing practices that colleges and universities enter into with credit card companies. This increased transparency was put in place thanks to last year's passage of Congressman Murphy's bill, the Student Credit Card Transparency Act of 2009, which was included in the Credit CARD Act of 2009.
Across the country, schools are receiving multi-million dollar payments in exchange for handing out their students' private mailing addresses, e-mail addresses, and local telephone numbers to creditors. The companies then use this information to relentlessly promote products to students through the mail, by phone, and on campus.
In 2007, 127 schools had joined with banks to issue ID cards that double as debit cards, a 144% jump from 2002. A 2008 USA TODAY survey of the nation's 15 largest universities revealed that more than half have bank card relationships with financial institutions. Despite this rapid growth, very little is known about these arrangements. Students often do not question the direct marketing they receive over the phone or in the mail, nor do they question the presence of banks and companies on campus offering free products if they sign up.
The cozy relationship between colleges and banks has been known for some time, but individual contract agreements have not been available to the public. Murphy's legislation changes this. Schools are now required to post these contracts on their websites or make them available by request. A sample letter of inquiry is included below.
"Students and their families have a right to know if their school is selling their personal information to companies who may not be giving them a fair deal," said Rep. Patrick Murphy. "My legislation helps shine light on these shady affinity agreements, and I encourage students and their families to request these contracts from their schools."
Pursuant to §140(f)(1) of the Truth in Lending Act, implemented by Regulation Z § 226.57(b) colleges and universities are now required by law to publicly disclose any and all credit card marketing contracts and other agreements made with card issuers or creditors for the purposes of marketing credit cards to students. Under this regulation, individuals are entitled, upon request and within a reasonable time frame, to all contract information between institutions and any card issuer or creditor, including all unredacted contract terms.
The text of a sample letter of inquiry follows:
I am writing to inquire about any and all business or marketing agreements that [name of school] may have with any and all credit card companies.
Under the Truth in Lending Act §140(f)(1), implemented by Regulation Z § 226.57(b), as an institution of higher education you are required by law to publicly disclose any and all credit card marketing contracts or other agreements made with card issuers or creditors for the purposes of marketing credit cards to students.
Under this regulation, individuals are entitled, upon request and within a reasonable time frame, to all contract information between your institution and any card issuer or creditor, including all unredacted contract terms. I am hereby requesting this information. Additionally, I am requesting all information pertaining to how any funds attained as a result of these contracts are allocated within the [name of school].
Please provide me with this information as soon as possible. If this information is available on your website, please let me know immediately so I can access it. If this information is only available in hard copy, please let me know the expedited time frame in which I can expect it. Thank you for your assistance with this matter.
Cc: Government Affairs Contact