Colleges urged to rein in credit card companies’ activities on campus

Colleges have turned a blind eye to aggressive and frequently deceptive credit card marketing on their campuses -- and sometimes even profit from it, a consumer group said Wednesday, calling on schools to curb the practices.

Universities commonly allow credit card companies to set up booths in campus bookstores, stuff advertisements in college “welcome” packets and post fliers in cafeterias. Some colleges, in exchange for a fee, give some banks the names, phone numbers and e-mail addresses of students to help in the peddling of plastic. The fees typically go to support student activities.

The consumer group, U.S. PIRG -- teaming up with the American Council on Education, a higher-education lobbying group, and the National Assn. of College and University Business Officers -- wants college administrators to take an active role in determining the type of credit card marketing allowed on their campuses, even to the point of discouraging issuers from including certain controversial terms in card agreements.

The coalition also is calling on schools to boost financial literacy efforts, prohibit the use of gifts as inducements in campus marketing, restrict the appearance of card-marketing posters and fliers on campus, block the dissemination of student lists and stop campus groups from striking deals with lenders.

“Colleges know that students come to our campuses with very little financial savvy,” said Becky Timmons, assistant director of government affairs at the American Council on Education. “The changes they are experiencing at that time can make them vulnerable to undertaking credit that they will later come to regret. We see this [campaign] as a way that colleges can help their students to become more sophisticated consumers.”

Ken Clayton, managing director of credit card policy at the American Bankers Assn., said the group supported financial education, but said it was inappropriate to dictate the terms of card agreements and the way they’re marketed.

“We don’t think that giving somebody a free T-shirt is going to make them act irresponsibly with a card,” he said. “That doesn’t give students enough credit.”

Launching what it described as a counter-marketing campaign, U.S. PIRG set up booths at 40 campuses nationwide Wednesday to parody the way cards are marketed to students. Wearing T-shirts and caps promoting the fictional credit card “Feesa,” protesters gave out lollipops emblazoned with the message “Don’t be a sucker.”

“We believe that college students are victims of unfair credit card marketing practices that we think we can stop,” said Ed Mierzwinski, consumer program director for U.S. PIRG, a federation of state Public Interest Research Groups. “Colleges can change their ways, whatever their previous motive.”

The credit card provisions that U.S. PIRG opposes include so-called universal default rules that allow card companies to raise a borrower’s interest rate for a credit transgression with other lenders, low “teaser” rates that quickly convert to high rates, and penalty fees and rates that can boost the cost of credit retroactively -- often when the cardholder is already financially stretched.

kathy.kristof@latimes.com