BLOOMINGTON, Ind. — The Consumer Financial Protection Bureau has withdrawn the names of two Indiana credit unions from a blog post that called out banks and CUs for a lack of transparency about their relationships with universities.
The four credit unions originally included on the list were Indiana University Credit Union, Michigan State University Federal Credit Union, Purdue Federal Credit Union and University of Wisconsin Credit Union. The list specifically looked at Big Ten schools.
David Sipes, vice president of marketing and business development at Indiana University CU, said that the CFPB changed the blog post after being informed that the CU doesn't have any kind of financial agreement with the university.
"I think it was an error on someone else's part referencing it that way, and we just contacted them to correct it," he said.
At Purdue FCU, president and chief executive Bob Falk said that the CU and the university are partners, "but not in the sense that there's a legal contract."
The CU has agreements with the university to lease office space and automatic teller machines, but the university doesn't receive any kick-backs from the CU.
Purdue FCU does have a credit card agreement with the Purdue University Alumni Association, but that is a completely different organization, and those cards aren't marketed to students at the university, Falk said.
Additionally, Purdue FCU has a small student loan program, but "we don't pay [Purdue University] a dime for any kickback on any dollar that we fund, no referral or nothing," he said.
The CFPB's amended blog post now lists Indiana University's and Purdue's financial partner as "unknown."
A footnote at the bottom of the blog entry notes that "an earlier version of this post noted that Purdue University and Indiana University had established agreements in place with partner financial institutions, but these agreements are related to real estate."
Still on the List
University of Wisconsin CU is still on the list, and Lisa Girdharry, senior vice president and chief marketing officer at the CU wrote in an e-mail to CU Journal that while the CU's contract with the university "has not yet been published online, we felt that all parties involved support transparency [and]...any individual can request from the university a copy of the contract."
University of Wisconsin CU provides the university a guaranteed annual flat fee rather than incentives based on student or faculty behavior.
"We believe the university should not be compensated based on the marketing success rate, number of students who opt-in or how active students are in their spending behavior," Girdharry wrote.
Michigan State University FCU representatives weren't available to comment at press time.
How It Started
In December 2013, the CFPB called on all financial institutions to publicly disclose their campus banking agreements and later did a survey of schools in the Big Ten to determine what information was available. Based on what it found, the CFPB then issued a call to disclose those agreements and wrote letters to universities urging them to post their agreements online.
The CFPB's aim with the blog post was to highlight transparency or lack thereof among schools with financial agreements with financial institutions, said Moira Vahey, a representative from the bureau's ombudsman's office.
The four CUs' names originally surfaced on Wednesday in a
The post identified 10 of 11 institutions that have partnerships with some of the largest universities that the CFPB said have either not disclosed or partially disclosed their agreements online. In addition to the four credit unions, the list also included institutions such as Capital One Financial Corp., U.S. Bank, PNC Bank and Wells Fargo & Co.
In response, the CFPB sent alerts to university officials, urging them to get their partnering institutions to make the agreement more easily accessible online.
"Based on a scan of your financial institution partner's website, it appears that" the partnering institution "has not disclosed this agreement. We wanted to alert you that this failure to be transparent may pose potential consumer protection risks," Chopra wrote in a sample letter posted on the blog.
The blog lists 14 universities that are members of the Big Ten conference, just one of which lacked a known partnering financial institution at the time of the original posting. Of the 13 remaining schools, eight had a partnering institution that didn't disclose any agreement online.
Three other universities had partnerships with TCF Bank, which the CFPB said posted a partial portion of the agreement online.
The only institution deemed to have made the entire agreement easily available was Hills Bank & Trust Co., which is partnered with the University of Iowa.
The CFPB has been pushing for greater transparency on agreements between schools and financial institutions since January 2013, when it launched a public inquiry into the financial products that are being marketed to students. The institutions frequently pay the schools to sell products on campus.
Credit card marketing on campus has already been curtailed, thanks to regulation in 2009. Agreements with credit card issuers and student lenders must also be publicly disclosed.
However, the CFPB remains concerned that there isn't enough information that is easily accessible online about agreements for all types of financial products.
In December, the CFPB issued an alert to financial institutions cautioning them about secretly paying schools in order to market other products such as deposit accounts, prepaid cards and debit cards to students. At the time, the agency called on the institutions to voluntarily post their agreements online.
The Wednesday blog follows up on that warning, now urging students to "tell us your story" on whether they can find the contract between their university and financial institution.
"Making these agreements available for all financial products shows schools' and companies' commitment to transparency, helping students and their families understand basic information about these products before you sign up," Chopra wrote on the blog.
