US PIRG consumer program director Ed Mierzwinski recently applauded the CARD Act’s requirement of full disclosure by credit card companies in relation to how much they pay colleges and universities to gain access to their markets.
Mierzwinski says that amount given by the credit card industry had long been kept secret from the public. The money given by credit card companies is usually coursed through different organizations like those of the alumni, student bodies, fraternities and sororities.
He adds that colleges and universities have also refused to make the information about the amount given to them by the credit card industry public. Mierzwinski says that this is in observance of contracts that stipulate confidentiality and competitive advantages.
With the CARD Act requirement, Mierzwinski identifies a report by the Federal Reserve which is a first of its kind. The Report on College Credit Card Agreements is part of the ways by which the government aims to address issues in the credit card industry which targets the market of 21 year olds and below in the education sector.
According to Mierzwinski, the Federal Reserve’s report reveals that for the year 2009, there were 1,044 agreements between credit card companies and the different colleges, universities, and organizations. The agreement gives the credit card companies access the market in the education sector. In those 1,044 agreements, a total of $83.5 million have been made as payment by the credit card issuers.
As a result, the companies which made the payment have seen credit card accounts opening by the end of 2009. The figure is at a total 53,164 by the end of October or by the same period last year.
Mierzwinski then emphasizes the need for transparency in the matter given that the experience of the past would show the importance of regular quantitative reports for more meaningful legislation.
He says that confidentiality in the information about the amount given by the credit card industry to the colleges, universities, and organizations have stalled public policy creation due to the inadequacy of records. The lack of records also precluded the determination of possible applicable laws in relation to the markets and the credit card industry.
With other relevant information such as the inclusion of the major or dominant banks accounting for 96 percent of all the agreements, Mierzwinski says that the government can be better equipped with the ways by which they can take action.