WASHINGTON The Consumer Financial Protection Bureau named 10 banks and credit unions on Wednesday that it claimed were not being transparent about their agreements with large universities to market financial products to students.
A Wednesday blog posting by Rohit Chopra, the CFPB's student loan ombudsman, said 10 out of 11 institutions that have partnerships with some of the largest universities have either not disclosed or partially disclosed their agreements online. Those banks included Capital One, Wells Fargo, U.S. Bank, Huntington Bank and PNC Bank.
In response, the CFPB sent alerts to university officials, urging them to get their partnering institution to make the agreement more easily accessible online.
"Based on a scan of your financial institution partner's website, it appears that" the partnering institution "has not disclosed this agreement. We wanted to alert you that this failure to be transparent may pose potential consumer protection risks," Chopra said in a sample letter posted to the blog.
The blog lists off 14 universities that are members of the Big Ten conference, only one of which lacks a known partnering financial institution. Of the 13 remaining schools, eight had a partnering institution that did not disclose any agreement online. Three other universities had partnerships with TCF Bank, which the CFPB said posted a partial portion of the agreement online.
The only institution deemed to have made the entire agreement easily available was Hills Bank & Trust Co., which is partnered with the University of Iowa.
The CFPB has been pushing for greater transparency on agreements between schools and financial institutions since January 2013, when it launched a public inquiry into the financial products that are being marketed to students. Often times, the institution pays the school to sell products on campus.
Credit card marketing on campus has already been curtailed thanks to regulation in 2009. Agreements with credit card issuers and student lenders must also be publically disclosed. However, the CFPB remains concerned that there is not enough information that is easily accessible online about agreements for all types of financial products.
In December, the CFPB issued an alert to financial institutions cautioning them about secretly paying schools in order to market other products like deposit accounts, prepaid cards and debit cards to students. At the time, the agency called on the institutions to voluntarily post their agreements online. The Wednesday blog follows up on that warning, now urging students to "tell us your story" on whether they can find the contract between their university and financial institution.
"Making these agreements available for all financial products shows schools' and companies' commitment to transparency, helping students and their families understand basic information about these products before you sign up," Chopra said on the blog.
Rachel Witkowski is a community banking reporter at American Banker.