The CFPB has issued a request for information (RFI) in which it seeks comments on a draft “Safe Student Account Scorecard” to be used by colleges and universities to obtain information from prospective financial institution partners offering financial products to students. The scorecard is intended to be used by schools to obtain information on product features and fees when selecting a partner, such as in a request for proposal seeking a marketing partnership. Although use of the scorecard would be optional, the RFI’s wording suggests that the CFPB hopes that schools will feel reputational pressure to use it. According to the RFI, the scorecard’s goal “will be to provide responsible institutions of higher education with a standardized format to solicit critical cost and feature information from prospective financial institution partners.”
The draft scorecard appears to be designed for use in connection with products other than credit cards, such as debit cards, prepaid cards, and deposit accounts. It consists of four sections as follows:
- The first section lists various “Safe Account features” to be provided without charge and, if the respondent’s product would include any fees or charges for such features, asks the respondent to provide details about any fees or charges associated with such features. It also asks the respondent whether it will waive students’ monthly maintenance fees and, if not, to describe such fees and any circumstances under which they would be waived.
- The second section asks for details about fees charged for various features and services.
- The third section asks about the financial institution’s marketing practices and its ability to adhere to specified guidelines. Such guidelines include the financial institution’s adherence to “transparency” about its relationship with the school in accordance with the “contract transparency requirements” listed in the scorecard. Those transparency requirements would mandate that the financial institution post its marketing agreement with the school on its website, something the CFPB has previously called upon financial institutions to do voluntarily. They would also mandate that the financial institution provide information about revenue sharing and royalties. Also included in the guidelines is the financial institution’s provision of an annual fee report that would include the number of student account holders in the previous year, the average and median fees paid by a student account holder per year, the three most frequently incurred fees per year, and the average and median fees paid by a student for each fee imposed.
- The fourth section asks the respondent to provide supplemental information on various “core features” of financial accounts offered to students, such as details on access to regional/national networks of surcharge-free ATMs and the number of surcharge-free ATMS that would be in close proximity to campus locations.
The RFI also includes a sample response by a financial institution to the draft scorecard as well as eight questions on “general areas.” The questions generally relate to use of the scorecard and the process used by schools to select a financial institution partner. However, one question asks what fees students most frequently incur under existing campus marketing arrangements for “checking accounts, prepaid cards and other financial products,” the degree to which fees and transaction patterns vary among different student populations, and how this compares “to the frequency of fee assessments on accounts unrelated to these marketing arrangements.” Comments are due on or before March 16, 2015.
In response to the proposed scorecard, the Consumer Bankers Association issued a statement in which it observed that “[m]any of the concerns outlined in the CFPB’s request for information are based on an antiquated study which primarily focuses on the wrongdoings of one non-bank institution and are not based on the actions of our depository institutions which must abide by strict federal disclosure rules and account opening procedures.”