Section 1 Short title
This Act may be cited as the “Curbing Abusive Marketing Practices with University Student Debit Cards Act” or the “CAMPUS Debit Cards Act”.
Curbing Abusive Marketing Practices with University Student Debit Cards Act
A BILL
To amend the Higher Education Act of 1965 to establish requirements for preferred banking arrangements, and for other purposes.
Sec. 2 Preferred banking arrangements
Section 487 of the Higher Education Act of 1965 (20 U.S.C. 1094) is amended—
in subsection (a), by adding at the end the following new paragraph:
“(30) In the case of an institution that has entered into a preferred banking arrangement, the institution will meet the requirements of subsection (k).”
in subsection (i), by adding at the end the following new paragraph:
“(7) Preferred banking arrangement
“(A) In general—The term preferred banking arrangement means an arrangement or agreement between a financial institution and an institution of higher education under which the institution of higher education directly or indirectly recommends, promotes, or endorses to its students, or requires the delivery of funds awarded under this Act to its students through, the deposit accounts or the general-use prepaid cards of the financial institution or the financial institution in general.
“(B) Financial terms—For purposes of this paragraph—
“(i) the terms bank and savings association have the definition given those terms, respectively, under section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813);
“(ii) the term credit union means a Federal credit union and a State credit union as those terms are defined, respectively, under section 101 of the Federal Credit Union Act (12 U.S.C. 1752);
“(iii) the term financial institution means a bank, savings association, credit union, or a person who has entered into an agreement with a bank, savings association, or credit union; and
“(iv) the term general-use prepaid card—
“(I) means a card or other payment code or device issued by any person that is—
“(aa) redeemable at multiple merchants or service providers, or automated teller machines;
“(bb) purchased or loaded on a prepaid basis; and
“(cc) honored, upon presentation, by merchants for goods or services, or at automated teller machines; and
“(II) does not include an electronic promise, plastic card, or payment code or device that is—
“(aa) used solely for telephone services;
“(bb) a loyalty, award, or promotional gift card, as defined by the Secretary;
“(cc) issued in paper form only (including for tickets and events); or
“(dd) redeemable solely for admission to events or venues at a particular location or group of affiliated locations, which may also include services or goods obtainable at the event or venue after admission or in conjunction with admission to such events or venues, at specific locations affiliated with and in geographic proximity to the event or venue.”
by adding at the end the following new subsection:
“(k) Requirements for preferred banking arrangement
“(1) In general—An institution of higher education that enters into a preferred banking arrangement with a financial institution shall—
“(A) develop a code of conduct with respect to the preferred banking arrangement with which the officers, employees, and agents of the institution of higher education shall comply, that—
“(i) prohibits a conflict of interest with the responsibilities of an officer, employee, or agent of the institution of higher education with respect to such arrangement;
“(ii) requires each such officer, employee, and agent to act in the best interests of the students enrolled at the institution of higher education in carrying out such arrangement; and
“(iii) at a minimum, includes the provisions described in paragraph (2);
“(B) publish such code of conduct prominently on the website of the institution of higher education;
“(C) administer such code by, at a minimum, requiring that all of the officers, employees, and agents of the institution of higher education with responsibilities with respect to the preferred banking arrangement be annually informed of the provisions of the code of conduct; and
“(D) provide effective enforcement of such code.
“(2) Code of conduct requirements—The code of conduct requirements described in this paragraph are as follows:
“(A) Ban on revenue-sharing arrangements
“(i) Prohibition—The institution of higher education shall not enter into any revenue-sharing arrangement with any financial institution.
“(ii) Definition—For purposes of this subparagraph, the term revenue-sharing arrangement—
“(I) means an arrangement between an institution of higher education and a financial institution under which—
“(aa) a financial institution provides deposit accounts or general-use prepaid cards to students attending the institution of higher education or to the families of such students; and
“(bb) the institution of higher education recommends, promotes, utilizes, sponsors, or otherwise endorses the financial institution or the deposit accounts or general-use prepaid cards of the financial institution and in exchange, the financial institution pays a fee or provides other material benefits, including revenue or profit sharing, to the institution of higher education, or an officer, employee, or agent of the institution of higher education; and
“(II) does not include an arrangement under which a financial institution pays a fair market price to an institution of higher education for the advertising or marketing of the financial institution to the general public by the institution of higher education.
“(B) Gift ban
“(i) Prohibition—No officer, employee, or agent of an institution of higher education who has responsibilities with respect to a preferred banking arrangement or has other responsibilities with respect to a financial institution shall solicit or accept any gift from the financial institution.
“(ii) Definition—In this subparagraph, the term gift means any gratuity, favor, discount, entertainment, hospitality, loan, or other item having a monetary value of more than a de minimus amount. The term includes a gift of services, transportation, lodging, or meals, whether provided in kind, by purchase of a ticket, payment in advance, or reimbursement after the expense has been incurred.
“(iii) Exceptions—The term gift shall not include any of the following:
“(I) Standard material, activities, or programs on issues related to a loan, default aversion, default prevention, or financial literacy, such as a brochure, a workshop, or training, but only if such materials, activities, or programs do not promote a product or service of a financial institution.
“(II) Favorable terms, conditions, and benefits on the financial products of the financial institution made available to all employees of the institution of higher education if such terms, conditions, or benefits are comparable to those provided to all students of the institution of higher education.
“(III) Entrance and exit counseling services provided to borrowers to meet the responsibilities of the institution of higher education for entrance and exit counseling as required by subsections (b) and (l) of section 485, as long as—
“(aa) the staff of the institution of higher education are in control of the counseling (whether in person or via electronic capabilities); and
“(bb) such counseling does not promote the products or services of any specific lender.
“(IV) Philanthropic contributions to an institution of higher education from a financial institution that are unrelated to the deposit accounts or the general-use prepaid cards of the financial institution or the financial institution in general or any contribution from the financial institution that is not made in exchange for any advantage related to the financial institution.
“(V) State education grants, scholarships, or financial aid funds administered by or on behalf of a State.
“(iv) Rule for gifts to family members—For purposes of this subparagraph, a gift to a family member of an officer, employee, or agent of an institution of higher education, or to any other individual based on that individual’s relationship with the officer, employee, or agent, shall be considered a gift to the officer, employee, or agent if—
“(I) the gift is given with the knowledge and acquiescence of the officer, employee, or agent; and
“(II) the officer, employee, or agent has reason to believe the gift was given because of the official position of the officer, employee, or agent.
“(C) Ban on staffing assistance
“(i) Prohibition—The institution of higher education shall not request or accept from any financial institution any assistance with any office or department of the institution of higher education.
“(ii) Certain assistance permitted—Nothing in this paragraph shall be construed to prohibit the institution of higher education from requesting or accepting assistance from a financial institution related to—
“(I) professional development training for financial aid administrators;
“(II) providing educational counseling materials, financial literacy materials, or debt management materials to borrowers, provided that such materials disclose to borrowers the identification of any financial institution that assisted in preparing or providing such materials; or
“(III) staffing services on a short-term, nonrecurring basis to assist the institution of higher education with financial aid-related functions during emergencies, including State-declared or federally declared natural disasters, federally declared national disasters, and other localized disasters and emergencies identified by the Secretary.
“(D) Contracting arrangements prohibited
“(i) In general—Except as provided in clause (ii), an officer, employee, or agent of an institution of higher education who has responsibilities with respect to a preferred banking arrangement or has other responsibilities with respect to a financial institution shall not accept from any financial institution any fee, payment, or other financial benefit (including the opportunity to purchase stock) as compensation for any type of consulting arrangement or other contract to provide services to or on behalf of the financial institution.
“(ii) Exception—Clause (i) shall not prohibit an institution of higher education from permitting an officer, employee, agent, or contractor of a financial institution to serve on a board of directors, or as a trustee, of the institution of higher education, if the institution of higher education has a written conflict of interest policy that requires such a board member or trustee to recuse themselves from any decision regarding deposit or prepaid accounts or a preferred banking arrangement at the institution of higher education.
“(E) Interaction with students—The institution of higher education shall not deny or cause unnecessary delay in the disbursement of a loan or grant under this title based on a student’s selection of a particular financial institution.
“(F) Advisory board compensation—An employee, officer, or agent of an institution of higher education who has responsibilities with respect to a preferred banking arrangement or has other responsibilities with respect to a financial institution, and who serves on an advisory board, commission, or group established by a financial institution, shall be prohibited from receiving anything of value from the financial institution, except that the employee may be reimbursed for reasonable expenses incurred in serving on such advisory board, commission, or group.”
Sec. 3 Disbursement of credit balance
Part G of title IV of the Higher Education Act of 1965 (20 U.S.C. 1088 et seq.) is amended by adding at the end the following:
“493E. Disbursement of credit balance
“(a) Establishment of System for Disbursement—Not later than 3 years after the date of enactment of the CAMPUS Debit Cards Act, each institution of higher education that enrolls a student who receives a grant or loan under this title shall establish a system for the disbursement of credit balances in accordance with subsection (b).
“(b) Electronic Payment System—Each institution of higher education described in subsection (a) shall establish a system for disbursement of credit balances through electronic payments to a deposit account or a general-use prepaid card (defined in section 487(i)(7)) with the protections afforded under the Electronic Fund Transfer Act (15 U.S.C. 1693 et seq.).
“(c) Distribution Options—The Secretary of Education, in consultation with the Secretary of the Treasury and the Bureau of Consumer Financial Protection, shall conduct a pilot program on providing students with the option of receiving credit balances by using the Treasury Direct Express system established under section 3336 of title 31, United States Code, or through any other low-cost alternative as determined by the Secretary.
“(d) Credit Balance—In this section, the term credit balance means the amount of program funds under this title credited to a student’s ledger account at an institution of higher education that exceed the amount assessed the student by the institution for allowable institutional charges, as defined by the Secretary.”
Sec. 4 Preventing unfair and deceptive marketing of financial products to students of institutions of higher education
In general— The Consumer Financial Protection Act of 2010 is amended by inserting after section 1031 the following:
“1031A. Preventing unfair and deceptive marketing of financial products to students of institutions of higher education
“(a) Definitions—In this section:
“(1) Financial institution—The term financial institution means any institution that offers, provides, or issues financial products, including banks, savings associations, and credit unions.
“(2) Institution of higher education—The term institution of higher education has the meaning given that term in section 102 of the Higher Education Act of 1965 (20 U.S.C. 1002).
“(b) Disclosure required
“(1) Disclosure by institutions of higher education—An institution of higher education, or an alumni organization or foundation affiliated with or related to an institution of higher education, shall publicly disclose (including on the website of such institution, organization, or foundation) any contract or other agreement made with a financial institution for the purpose of marketing a financial product—
“(A) in the case of a contract or agreement entered into before the date of enactment of this section, by not later than 90 days after such date of enactment; and
“(B) in the case of a contract or agreement entered into on or after such date of enactment, by not later than 90 days after the institution, organization, or foundation enters into the contract or agreement.
“(2) Reports by financial institutions
“(A) In general—Each financial institution shall submit an annual report to the Bureau containing the terms and conditions of all contracts or other agreements made with an institution of higher education, or an alumni organization or foundation affiliated with or related to an institution of higher education, relating to any financial product offered to students at such institution of higher education.
“(B) Details of report—The report under subparagraph (A) shall include—
“(i) any memorandum of understanding between or among the financial institution and an institution of higher education, alumni organization, or foundation that directly or indirectly relates to any aspect of any agreement referred to in subparagraph (A) or controls or directs any obligations or distribution of benefits between or among any such entities;
“(ii) the amount of any payments from the financial institution to the institution of higher education, alumni organization, or foundation during the period covered by the report, and the precise terms of any agreement under which such amounts are determined; and
“(iii) the number of financial products covered by any such agreement that were originated during the period covered by the report, and the total number of financial products covered by the agreement that were outstanding at the end of such period.
“(C) Aggregation of information—The information required to be reported under subparagraph (A) shall be aggregated with respect to each institution of higher education or alumni organization or foundation affiliated with or related to such institution of higher education.
“(D) Initial report—The initial report required under subparagraph (A) shall be submitted to the Bureau not later than 1 year after the date of enactment of this section.
“(3) Reports by Bureau—The Bureau shall submit to Congress, and make available to the public, an annual report that lists the information concerning the agreements submitted to the Bureau under paragraph (2) by each financial institution, institution of higher education, alumni organization, or foundation.
“(4) Record repository—The Bureau shall establish and maintain on its publicly available website a central repository of all contracts and other agreements contained in reports received from financial institutions pursuant to this paragraph, and such contracts and agreements shall be in a form that is easily accessible and retrievable by the public.
“(c) Inducements prohibited—No financial institution may offer to a student at an institution of higher education any tangible or intangible item to induce the student to apply, purchase, or obtain a financial product offered by the financial institution, if the offer is made–
“(1) on the campus of an institution of higher education;
“(2) near the campus of an institution of higher education, as determined by rule of the Bureau; or
“(3) at an event sponsored by or related to an institution of higher education.”
Rulemaking required— Not later than the end of the 2-year period beginning on the date of the enactment of this Act, the Bureau of Consumer Financial Protection shall issue regulations identifying as unlawful unfair, deceptive, or abusive acts or practices in connection with any transaction with a consumer for a consumer financial product or service, or the offering of a consumer financial product or service, as described under section 1031 of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5531).
Technical and conforming amendment— The table of contents of the Dodd-Frank Wall Street Reform and Consumer Protection Act is amended by adding after the item relating to section 1031 the following:
Sec. 5 Study of financial product marketing
Study— The Bureau of Consumer Financial Protection shall carry out a study on the marketing of financial products to students enrolled in institutions of higher education. Such study shall include an analysis of—
the extent to which financial institutions use an institution of higher education's name, emblem, mascot, logo, or other words, pictures, or symbols readily identified with such institution of higher education in the marketing of financial products, including deposit accounts, general purpose reloadable prepaid cards, and payment services;
the extent to which institutions of higher education provide access to campus facilities and sponsored functions to financial institutions, including orientation activities for new and prospective students; and
the extent to which agreements between financial institutions and institutions of higher education are accessible for inspection by students and their families.
Report— Not later than the end of the 1-year period beginning on the date of the enactment of this Act, the Bureau shall issue a report to the Committees on Education and the Workforce and Financial Services of the House of Representatives and the Committees on Health, Education, Labor, and Pensions and Banking, Housing, and Urban Affairs of the Senate containing—
all findings and determinations made in carrying out the study required under subsection (a); and
any legislative recommendations the Bureau may have.
Rulemaking— If, after conducting the study required under subsection (a), the Bureau determines that financial products are not marketed to students enrolled in institutions of higher education in a fair manner, the Bureau shall issue regulations to ensure such products are marketed in a fair manner.
Sec. 6 Sense of Congress
It is the sense of the Congress that financial products marketed to students enrolled in institutions of higher education should be presented in a fair and neutral manner.
Sec. 7 Definitions
For purposes of this Act, the terms financial institution and institution of higher education have the meanings given the terms in section 1031A of the Consumer Financial Protection Act of 2010, as added by section 3 of this Act.