Banks and other financial institutions should let the public know if they are paying colleges and universities to be able to market debit cards, accounts and other products to students, according to the Consumer Financial Protection Bureau (CFPB).
The financial watchdog called on companies to disclose their relationships with schools on Tuesday to better inform students about the financial products they’re being offered.
“Students and their families should know if their school, whether well-intentioned or not, is being compensated to encourage students to use a specific account or card product,” CFPB Director Richard Cordray said in a statement. “When financial institutions secretly give kickbacks to schools, they are engaging in risky practices.”
Since 2009, financial institutions have had to make disclosures about college credit cards that they offer, but not prepaid and debit cards.
Most arrangements between banks and colleges to offer debit cards at school are already available to the public, however, according to the CFPB. But the agency is concerned that consumers can have a hard time finding details about the arrangements.
The CFPB’s call came as it issued an annual report to Congress on credit card agreements between banks and colleges.
According to the CFPB’s data, the number of agreements on college credit cards declined by 23 percent from 2011 to 2012 and by a total of 41 percent since 2009. Additionally, colleges and universities are paid less by credit card companies than they were in 2009 and fewer college accounts are being opened, the agency found.