CFPB Helping Colleges Analyze Prepaid Card Offers
In an effort to combat misleading information about college-sponsored prepaid cards, the Consumer Federal Protection Bureau has developed a Safe Student Account Scorecard, which provides a thorough comparison of prepaid offers. The scorecard provides upfront information about a card’s features, fees and company sales tactics so schools can avoid sponsoring cards with “tricks and traps.”
The goal of the scorecard is to help colleges analyze the prepaid cards they may offer to their students. It levels the playing field for prepaid card providers. Colleges and universities can compare prepaid card offers without being influenced by a card provider with a high marketing budget. Many educational institutions will receive royalty payments from prepaid cards they promote on their campus. The scorecard takes the royalties out of the equation so schools can choose the best possible card for their students.
Some of the specific factors included in the scorecard are:
- A description of product fees and features
- Full disclosure about marketing practices
- How much money the prepaid card provider earns from accounts
- Annual fee summary
Schools can adapt the scorecard to meet their specific needs. Each school has a certain set of criteria it looks for in the products it promotes to its students. The scorecard makes this process much simpler and forces financial institutions to provide whatever information the school requests.
“An important issue for young people is how best to manage their money while they are still in school,” said CFPB Director Richard Cordray in a statement. “Because of the influence schools may have on the financial products students choose, we are working to arm them with the information they need to negotiate safe and affordable products for students.”
At this time, the scorecard is just in a drafted state, but the CFPB will be accepting feedback on it until March 16, 2015.