Home > 2011 > Credit Cards > Paging Mr. Bernanke: Credit Card Marketers May Be Breaking the Law

Paging Mr. Bernanke: Credit Card Marketers May Be Breaking the Law

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Campus PoliceAccording to a recent poll by University of Houston professor Jim Hawkins, and reported on by our own Farnoosh Torabi, credit card companies are still marketing their products on college campuses. Almost a third of the freshmen polled by Hawkins reported seeing credit card hawkers on campus.

One little problem: That’s illegal. According to a new rule by the Federal Reserve, credit card marketers have to stay at least 1,000 feet away from university campuses and university-sponsored events (like, say, big bowl games).

So if someone is breaking that rule, whose job is it to enforce it? Right now the Federal Reserve Board (FRB) itself is the enforcement agency. When the Consumer Financial Protection Bureau gets up and running later this year, the power to enforce the rule will transfer to it, Hawkins says.

That’s good news, because the Fed appears to have other things on its mind. Until the consumers bureau takes over, students may be left on their own. Which would mean individual students or other concerned consumers would need to hire their own lawyers to enforce the law and keep credit card marketers off campus.

“I haven’t heard if the FRB is actively enforcing the rules yet,” Hawkins says, “but private individuals are able to now.”

Image: Shaun Greiner, via Flickr.com

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  • Nessa Feddis

    A small problem: The article and report it cites are incorrect that it is illegal to market credit cards on campus. Section 226.57(c) of Regulation Z, (which implements the rules recently passed by Congress) provides that card issuers may not offer any college student “any tangible item to induce such student to apply for or open” a credit card account if it is made on or near campus or at an event sponsored or related to the university. It is not illegal, nor was it Congress’s intent, to completely prohibit on or near-campus credit card marketing. (Keep in mind, many non-students live near campuses.) Accordingly, it is a little unfair to take Mr.Bernanke and the Fed to task, as the headine does, for not enforcing a rule that doesn’t exist..

    See:
    http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&sid=3060e7f7c0c92d604904890d803fbb8e&rgn=div8&view=text&node=12:3.0.1.1.7.7.8.7&idno=12

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