The CFPB Requests That Agreements Marketing Financial Products to Students Enrolled in Institutions of Higher Education be Voluntarily Made Available on the Company's Website
As a follow up to its initial inquiry earlier this year, the Consumer Financial Protection Bureau (“CFPB”) is alerting financial institutions about the “potentially risky practice of making secret payments” to colleges and universities to market financial products to students. On January 31, 2013, the CFPB published a notice in the Federal Register seeking information regarding the impact of financial products marketed to students enrolled in institutions of higher education (the “Notice”). Based on the information it received in response to the Notice, the CFPB has indicated that the number of college credit card agreements has continued to decline in 2011-2012. It appears, however, that the financial product marketing partnerships have shifted away from credit cards towards other financial products.
As predicted, the CFPB is requesting financial institutions to voluntarily make these agreements available to students and families in a clear and conspicuous place on the company’s websites, as a sign of the financial institution’s commitment to transparency. The CFPB indicated that failing to disclose these types of agreements with institutions of higher education may raise potential consumer protection risks. Starting in January 2014, the CFPB will contact financial institutions to find out more about their commitment to transparency and best practices regarding these types of agreements.