Miller slams schools' card marketing
Des Moines Register
10-31-07
Practice not in students' best interest, he tells lawmakers
By CLARK KAUFFMAN
REGISTER STAFF WRITER
Iowa's state universities should not be marketing credit cards to their students,
Iowa Attorney General Tom Miller said Tuesday.
Miller told the Iowa Legislature's Government Oversight Committee that he
understands why the schools might want exclusive agreements with Bank of
America to market university-branded credit cards, if only to raise money and
limit the number of solicitations from the bank's competitors.
"Respectfully, I'd say the better practice would be to not be involved at all," he
said. "Students can easily get into trouble. They are just starting to manage their
financial affairs. ... They don't, basically, have the income to pay off a credit card.
It's a very easy trap to get into."
Over the next five years, the privately run alumni associations at Iowa's three
state universities could collect up to $8.4 million from Bank of America for their
assistance in marketing credit cards that bear the publicly owned names and
logos of the schools. The taxpayer-supported universities stand to collect $1.2
million from those same deals.
Such arrangements are common throughout the United States, but they're
generating protests nationally from consumer advocates and public-interest
groups.
Miller said he recognizes the need for Iowa's alumni associations to raise money.
But, he said, the organizations can achieve that goal without pitching credit cards
to students.
"We have to understand what our primary purpose is in government and,
certainly, at the universities," Miller said. "The primary purpose of the universities
is the kids, the students. The secondary purpose is to generate income to
provide services to the students.
"But the primary interest always has to be, in my view, the students. And if that's
the case then, you know, you're not involved in credit card marketing to them."
Miller's comments come one week after the presidents of the University of Iowa
and Iowa State University said they were attempting to eliminate marketing
aimed at students by having their alumni associations renegotiate their contracts
with Bank of America.
Credit cards endorsed by the University of Northern Iowa have not been
marketed to students for the past five months.
University of Iowa Alumni Association President Vince Nelson told lawmakers
that if his organization were truly interested in signing up student cardholders,
then it must be doing "a very bad job," as only 208 students are actively using the
U of I card.
Nelson signed a Bank of America solicitation mailed to students earlier this year.
It says, "Imagine the convenience of being able to purchase supplies for your
classes without worrying about carrying a lot of cash. You could pay for your
books - or get quick cash in an emergency - and put it on one easy-to-use
account. That's the kind of flexibility every student can appreciate and it can be
yours with the University of Iowa credit card."
U of I alumni officials say that since last year, only four students have applied for
a credit card through "tabling" - a process in which Bank of America
representatives set up a table on campus and offer free merchandise in return for
filling out a credit card application.
Nelson told lawmakers that the alumni association is committed to openness and
public accountability.
Immediately after his testimony, Nelson left the hearing room and dashed down a
hallway and a set of stairs at the Capitol building, refusing to acknowledge
questions from a pair of reporters.
Later, the association's vice president, Chris Bavolack, fielded questions about
the organization while Nelson stood by.
ISU Alumni Association President Jeff Johnson told legislators that he
objected to The Des Moines Register's description of the free gifts offered to card
applicants. Johnson said the news articles make it appear that the gifts - which,
according to alumni records, can include ISU-branded clothing and bobblehead
dolls - are "whimsical" in nature. "That is not the case," he said. "These are
licensed products."
U of I student leaders have called for restrictions on the use of gifts for card
applicants. Student leaders at ISU have said they have "no specific objections" to
ISU's credit card program, but they do not endorse it. Student leaders at UNI say
they see nothing wrong with the current UNI credit card program.
Some students have expressed concern that Bank of America has access to
their contact information. University and alumni officials have repeatedly said
such access is guaranteed under Iowa law.
But as part of its credit card program, the U of I has promised to give its alumni
association access to unspecified "nonpublic information" that's off-limits to the
average citizen. At ISU, the school is obligated to turn over "updated and current
lists containing names, postal addresses and, when available, telephone
numbers" of everyone who purchases either a single-game ticket or season ticket
to a football or basketball game.