A group that represents consumer banks is pushing back against warnings by the Consumer Financial Protection Bureau that undisclosed arrangements between banks and colleges to market financial products may pose a risk to consumers.
The amount of consumer risk is one factor that can trigger more scrutiny of an institution by the bureau. While colleges and universities aren’t subject to the bureau’s oversight, many financial institutions are.
The Consumer Bankers Association said Wednesday in a letter to CFPB Director Richard Cordray that it took exception to the bureau’s “vague allegations” and the “implicit threat of supervisory action” against its members that do not voluntarily disclose the agreements.
“It is unclear how posting proprietary contracts online would benefit consumers,” wrote Richard Hunt, the group’s president and CEO. “We agree students need clear information to make intelligent choices that will benefit their college experience, but if the CFPB has any evidence the failure to post agreements harms consumers, it has not revealed it.”
Congress in 2009 required credit card providers that have affiliations with colleges and universities to disclose the terms of those arrangements. But no such requirement exists for other financial products, such as university-branded debit cards, that are marketed on campuses.
Consumer advocates, the Government Accountability Office, and some Democratic lawmakers, have all called for the public disclosure of such agreements. The U.S. Department of Education is currently weighing new regulations that may mandate disclosure.
The National Association of College and University Business Officers has also recommended that colleges publicly disclose the terms of agreements they have with debit card providers.
“Companies that treat their customers fairly should have nothing to fear from public scrutiny,” CFPB spokeswoman Moira Vahey said Wednesday in response to the bank group’s letter. “Students and families should be able to easily review these agreements so they can understand the products before they sign up.”
- Consumer bureau calls on financial institutions to disclose debit card agreements with colleges
- CFPB opens wide-ranging inquiry into campus debit cards
- Consumer bureau issues initial findings on college debit card deals
- Consumer Financial Protection Bureau urges colleges to look more closely at bank deals
- Obama administration to propose new rules for campus financial products
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