Social Media New College Frontier for Credit Card Marketers

Tim Goral's picture
Thursday, March 22, 2012

Credit card companies are turning to social media outlets such as Facebook to sign up college students, according to an analysis by University of South Carolina law professor Eboni Nelson.

In an article for the April issue of the Financial Services Policy Report, Nelson looks at the effectiveness of the Credit Card Accountability Responsibility and Disclosure Act of 2009 — the CARD Act — in protecting young adults.

“The CARD Act’s provisions for young consumers have been a step in the right direction, but more action is needed to protect college-age adults,” Nelson said, who joined the USC Law School faculty in 2007. “Card companies continue to see consumers who are under age 21 as a profitable market and, as a result, they strategically have found ways to solicit the college-age crowd, including through social media.”

Nelson, who researches and teaches consumer and higher-education law, found several examples of aggressive marketing practices and lax eligibility requirements by credit card companies despite the protections put in place by the law.

That is not good news for young people who are also piling up student loan debt, said Nelson, who received her J.D. from Harvard Law School.

The CARD law, administered by the Consumer Financial Protection Bureau, has curbed a variety of predatory practices that had been commonplace on U.S. college campuses, she said.

But in analyzing data from the financial industry, government and higher education and reviewing news reports, Nelson found credit card companies restricted from some of these practices found new ways of targeting college-age students.

Banned from using credit information to find potential applicants, companies have turned to the mailing lists of colleges themselves and rewards and loyalty programs to find young borrowers, Nelson said.

Read more »