New York regulators are conducting an investigation into deceptive credit card marketing practices that target students at their colleges.

Attorney General Andrew M. Cuomo's office has sent letters to every college and university in New York requesting that the schools submit any exclusive contracts in place with credit and debit card companies so that it can examine any problematic marketing practices. The letters also call on the schools to adopt policies that will help students avoid getting saddled with credit card debt before their graduation.

"Today’s students are facing a growing mountain of debt that can burden them long after graduation,” said Cuomo, in a prepared statement. "As a new school year begins, we want to make sure that colleges and universities are doing all that they can to help students avoid financial dangers. Especially in this difficult economy, schools must ensure that credit card companies are not engaging in deceptive marketing practices and jeopardizing the futures of their students.”

The investigation builds on an earlier examination of conflicts of interest in the student lending industry, which led to major nationwide reforms, according to Cuomo's office. The investigation will look at possible deceptive credit card marketing practices that have targeted students, such as:

  • Schools have given marketers their students’ personal contact information - without students’ permission - to allow companies to solicit students by mail, telephone, and online.
  • Credit card companies have bombarded students with solicitations at student centers, athletic events, orientations, classroom buildings, and other campus locations.
  • Credit card companies pay schools for the exclusive right to market cards to their students and to brand cards with their insignia. Schools have entered into these deals without evaluating if the terms of the cards are in their students’ best interests and without a competitive bidding process.
  • Some schools have had a provision in their contracts with credit card companies that provide the schools with a percentage of the finance charges assessed to certain credit card accounts.
  • Companies have lured students by providing free gifts and food when they applied for a credit card.
  • As part of the investigation, Attorney General Cuomo has sent letters to the approximately 300 colleges and universities in New York calling on the schools to:
  • Submit any exclusive contracts they currently have with credit and debit card companies for an evaluation by his office.
  • Ensure that their practices comply with the provisions of a 2009 federal law, the Credit Card Accountability, Responsibility, and Disclosure Act (the CARD Act), which provides new protections to college students from deceptive credit card marketing practices and unfair credit card terms, and other recent changes in federal law concerning debit cards.


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