Among the many of the sections of The Credit Card Accountability Responsibility
and Disclosure Act of 2009 (the CARD Act), one was supposed protect young
adults. A law professor at University of South Carolina, Eboni Nelson, conducted
analysis to determine the effectiveness of the CARD Act, since it became
effective February 22, 2010.
He analyzed data from the financial industry, government, higher education
and news reports. He found that card marketers have discovered new ways to
market to students because of the CARD Act restrictions. This is because credit
card companies are smarter than legislators.
Prior to the law, credit card marketers set up tables at campuses with freebies
such as pizzas, hats and shirts to encourage students to apply for credit cards.
In addition, they purchased student lists from colleges and sent them pre-
approved credit card offers. It was very easy for students to obtain credit cards.
The CARD Act prohibited the credit card marketers from soliciting on-campususing free incentives. And, credit card marketers could not offer credit cards to
anyone under 21, that hadn’t applied for it first or didn’t have income to cover
the credit obligations. Those that apply must submit proof of income or have
someone over age 21 co-sign.
Some of the credit card marketers have gotten around the law by using savings
accounts, allowances, stipends, grants, student loans and scholarships as
income. In addition, there is very loose interpretation of “covering the credit
obligation”. To me, covering the obligation would be paying the amount in full,
not the minimum monthly payment or partial payment.
Other marketing alternatives include soliciting off campus, college mailing
lists and on Facebook. These offers include discounts, rewards, and special
introductory rates. Essentially credit card issuers have taken up shop at popular
watering holes instead of at the student center, which might prove to be more
effective over time.
“The Credit Guru”, Longtime FICO Insider & Credit Industry Authority President Of The Ulzheimer Group, LLC
John Ulzheimer is a nationally recognized expert on credit reporting, credit scoring and identity theft. He is the President of The Ulzheimer Group, the Director of Credit Education at DisputeSuite.com, Credit Expert at CreditSesame.com and the credit blogger for Mint.com. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry. He has served as a credit expert witness in more than 150 cases and has been qualified to testify in both Federal and State court on the topic of consumer credit.
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