Giannoulias “solicits” students for credit card reform
Borrows credit card marketing tactics to circulate petition

March 5, 2009

Illinois State Treasurer Alexi Giannoulias and SIUE college students held a “counter marketing” event at the Morris University Center today, encouraging undergraduates to sign a petition in support of responsible credit card marketing.

Dressed like FEESA (rhymes with VISA) credit card marketers, student activists distributed free gifts at the center in exchange for signatures. Unlike the t-shirts, Frisbees and sandwich coupons that financial institutions use to lure students into signing up for cards with high interest rates, the Treasurer’s gift was educational: credit card sleeves that remind students about late fees.

“The credit card industry vigorously markets to college students, but they work hard to hide their unfair practices that pile on the debt,” Giannoulias said. “We are turning the tables on credit and bank card marketers, using their bait-and-switch tactics to educate students about responsible spending and fair marketing.”

The student leaders at SIUE invited Giannoulias to campus to showcase their counter marketing efforts after learning the Treasurer drafted proposed legislation that would restrict marketing on all campuses in Illinois. Giannoulias also made campus visits to the University of Illinois in Champaign-Urbana and Southern Illinois University in Carbondale this week, which like SIUE have voluntary marketing bans.

"In light of our national economic crisis, it is important that good spending practices are echoed throughout younger generations,” said SIUE student Crystal Abbey. “This is especially important to college students who are bombarded with credit card applications on a regular basis. Limiting the temptation will help to instill smart spending habits with college students."

Introduced in February by State Sen. Donne Trotter and State Rep. Kevin Joyce, SB1524 and HB2352 direct all colleges, universities and their affiliates to:

• Ban credit issuers from offering any gifts when marketing credit cards on campuses

• Block the selling or transferring of student names and personal information

• Disclose marketing agreements with banks that target students

• Require financial literacy education be offered to freshmen if undergrads are the target of marketing or advertising on campus

Violators of any of the provisions would face a misdemeanor charge and a fine of up to $1,000.

“This bill helps stop the worst practices of the credit card industry on campus and adds transparency to their relationships with universities and their affiliates,” said Brian Imus, State Director with the Illinois chapter of U.S. Public Interest Research Group.

A survey of college students published in March 2008 by the U.S. PIRG found nearly two-thirds of college undergrads have a credit card. Seniors were carrying average debt balances of $2,623, more than double the average $1,301 debt of freshmen. Students said beyond the on-campus solicitations, they received an average of five credit offers through the mail each month.

Many of those students sign up for the cards on or near college campuses after marketers catch their attention with free gifts and low-teaser rates that shoot up at a later date. In the fine print are other practices that take advantage of the consumer, such hidden fees, penalty interest rates and universal default (which allows credit card companies to raise your rate if you're late with a payment -- even to another company).

In addition, colleges, foundations and alumni associations are entering into agreements with banks worth millions of dollars to exclusively promote their affinity credit cards to students and alumni. These agreements, which are often considered confidential, allow credit lenders access to personal information that enables them to target students directly by mail, phone or email.

“In today’s economic climate, schools and their affiliates need to find creative ways to fund their programs and services, but not at the expense of students,” Giannoulias said. “Requiring disclosure is akin to adding a conscience to the contract.”

Giannoulias stressed that the legislation does not prohibit students from applying for credit cards or establishing credit before they graduate and start earning an income.

“When used correctly, credit cards are the key to building a healthy credit history,” Giannoulias said.

To learn more about the legislation or view an example of the FEESA petition, visit www.treasurer.il.gov and follow the Credit Card Campaign link.