A New Way to Get 'Carded'

Connecticut Restricts Credit Card Marketing to College Students

Connecticut Gov. M. Jodi Rell Wednesday announced her signing of a bill that regulates credit card marketing on campuses to college students and restricts debt collection actions that can be taken by credit card companies against parents.

Rell said the new law sets strict parameters on when, where and how credit card companies may attempt to attract young adult cardholders. “Students are already burdened with education loans by the time they leave college. They risk taking on even more financial pressure when they give in to the lure of credit cards made available to them right on campus,” the governor said.

The move was lauded by state Rep. Ryan Barry, D-Manchester, House chairman of the General Assembly's Banks Committee and a sponsor of the legislation.

“College students are targeted by credit card companies because they are easy prey and active consumers. Since college students are generally new to managing debt obligations, spending can easily get out of hand and cause serious future credit rating problems,” Barry said.

House Bill 6483, An Act Concerning Credit Card Offers on College Campuses requires the Boards of Governors of Higher Education to adopt a policy, on or before Jan. 1, 2010, requiring credit card companies to register with colleges and universities before conducting any business on campus.

Provisions of the law:

· Prohibit credit card companies from marketing during orientation and class registration periods;
· Require companies to distribute credit care management education materials along with marketing information;
· Prohibit companies from offering gifts and incentives at athletics events as part of their marketing strategy;
· Prohibit colleges and universities from selling student names and addresses to credit card companies.

It also bans credit card companies from trying to collect a student’s debt from his or her parent unless the parent agrees in writing to be liable for the debt.

“Connecticut is leading the charge against unfair and deceptive credit card practices,” said U.S. Sen. Christopher Dodd, D-Conn. “These strict regulations, coupled with the tough new protections against predatory practices established by the Credit CARD Act, will go a long way towards ensuring that Connecticut college students don’t fall prey to the tricks and traps of credit card companies.”

Dodd sponsored federal legislation - the Credit Card Accountability, Responsibility and Disclosure Act - which President Barack Obama signed into law in May.

Susan Bruno, a certified public accountant and principal of Beacon Wealth Consulting LLC in Norwalk, Conn., said she has a daughter in college and believes it is a good idea for students to build a credit history responsibly.

"Credit cards have caused a sense of over-spending because it's so easy," she said.

Parents would be in a better position to teach their children financial literacy and help protect their children's credit scores if they can have access to credit card account activity, Bruno said.

"There is a question of privacy. Similarly to transcripts, we pay the tuition bills, but we don't get to see the grades. We have to ask her to show that to us," Bruno said. "How can we teach financial literacy if we don't know what's going on? You can't."

The American Bankers Association, an industry group that represents credit card issuers, said that as a co-signer, a parent would not be able to receive copies of monthly statements. But joint accounts allow both the primary cardholder (i.e. the student) and the co-signer (i.e. parent or guardian) to access the account, including online.

Joint borrowers usually designate who would receive statements, the ABA said.

The federal CARD Act bans universal default, double-cycle billing, retroactive rate increases unless the cardholder is delinquent by 60 days or more and over-the-limit fees unless the cardholder chooses to exceed the limit. It also requires credit card companies to post their card agreements online and mandates notice of 45 days before rate increases are imposed.

Anyone under 21 must show proof of ability to repay the debt before getting a card or complete a certified financial literacy course.

Card issuers also are prohibited from charging customers a fee for paying a bill by telephone or Internet.

Coming tomorrow: Some provisions of the CARD Act go into effect next month.