Countering Credit-Card Pushers


A Ford Foundation-funded guerrilla marketing campaign on campuses is out to help students become savvy credit consumers

A different breed of credit card marketer flooded college campuses across the country on Oct. 10: a counter-marketer. Credit card companies have been storming college campuses in recent years to seize a slice of the promising college market. But as student debt levels have surged, in some cases to dangerous levels, credit card companies have come under increasing scrutiny by federal and state lawmakers. Further hearings on credit card industry practices (BusinessWeek, 9/6/07) will continue through the fall before the Senate Banking Committee.

Now, activists groups are adopting the credit card industry's own practices to try to stop students from drowning in debt. Instead of credit card applications, these marketers are handing out information booklets outlining credit traps and unfair practices that can victimize students. Instead of Frisbees and T-shirts, these marketers are passing out lollipops that read, "Don't be a sucker." Led by the U.S. Public Interest Research Group, the counter-credit card marketers set up tables on 34 campuses across the country. It was a guerrilla marketing campaign, funded by the Ford Foundation and organized by U.S. PIRG, to reform the way that credit card companies market to college students.

Visa—Or FEESA?

"College students are vulnerable and already hammered by the high cost of education," says Ed Mierzwinski, U.S. PIRG's consumer program director. "The counter marketing is important to reach college students on campuses."

On Oct. 10, volunteer cadres of students from the State PIRGs manned the tables that were set up to appear at first glance like a run-of-the-mill credit card tabling station. But in fact, they were marketing themselves as FEESA, a play on the popular Visa card logo, with a built in warning to students to watch out for run-away credit card fees.

"The credit card industry just keeps on changing its tactics to get at students," says Tommy Bruce, a student at the University of Arizona. "This will help stop them from coming onto campuses and using aggressive tactics."

The major card companies and the American Bankers Assn. could not be reached for comment or declined to comment specifically on the counter-marketing campaign. But the companies take exception to criticisms of their practices. Bank of America (BAC), Citibank (C), JPMorgan Chase (JPM), American Express (AXP), and others say they try to make sure their cards are used responsibly. JPMorgan and Citibank, for example, provide substantial financial literacy materials for students. A spokesman for JPMorgan says the bank's "approach toward college students is to help them build good financial habits and a credit history that prepares them for a lifetime of successful credit use."

Enlisting Colleges on Principles

The counter-marketing campaign will continue to ramp up over the next 18 months, hitting 40 campuses. Through the energetic campaign couched in youthful tones, U.S. PIRG hopes to curb some of the most aggressive bank marketing tactics, make students savvy consumers, and put pressure on the credit card industry to reform its practice on college campuses.

It's the first step in U.S. PIRG's truth about credit campaign that aims to reform the way that credit card companies market to students on campus and stop what the group describes as unfair industry practices. Enlisting the support of campus administrators and others, the campaign unites consumer advocates and students to raise awareness about the dangers of mismanaged credit. So far, leaders from Student Affairs Administrators in Higher Education, the National Association of College & University Business Officers, and the American Council of Education (ACE) are on board.

"We think that colleges can become change agents and can adopt basic principles governing credit card marketing that will drastically help college students," says Mierzwinski. U.S. PIRG wants colleges to adopt basic principles governing the way that credit card marketers operate on campus.

States Toughen Credit Card Marketing

As concern over student debt levels rise, lawmakers and campuses nationwide have turned a bright light on the issue of student debt. Fifteen states have passed some restrictions on credit card marketing. The U.S. PIRG campaign hopes to recruit colleges to follow suit, adopting their own restrictions to stand sentry against rising student debt levels.

The goal of the campaign is to get at least 15 campuses across the country to adopt the principles governing credit card marketing, according to Christine Lindstrom, U.S. PIRG student debt program director. Once schools adopt these principles, U.S. PIRG plans on working with colleges to monitor their progress.

"Colleges know that students come to our campuses with very little financial sophistication, and they can be vulnerable to getting a credit card that they will later regret," says Becky Timmons, assistant vice-president for government relations for ACE. "By adopting these principles, colleges can fulfill their own obligation to these students."

The principles include prohibiting the use of gifts to attract students, controlling the amount of posters and flyers for credit cards on campus, increasing financial literacy, and blocking marketers' access to lists of personal information about students.

Silver-Greenberg is a reporter for BusinessWeek.com.

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