Monday, May 18, 2015

Abusive Fees

If this story were about college students' not having the maturity or responsibility necessary to keep from racking up heavy credit card debt, my take would be "too bad, so sad" along with some commentary about the real world.  I don't fault companies when individuals make bad decisions.  I do fault companies, however, when their practices are abusive, and in this case it's probably good that the federal government is stepping in:
The Obama administration is taking on banks and other financial firms with new rules that would ban certain fees they can charge college students as well as restrictions on how they market products on campuses.
The U.S. Department of Education on Friday unveiled draft regulations on debit cards and other financial products offered on campuses. Consumer advocates have long sought the rules, which have drawn the ire of the financial services industry.
The draft regulations target two categories of financial products. First, the department is seeking to place the most stringent restrictions on debit cards and prepaid cards that colleges use to directly disburse federal grants and loans to students. For those accounts, the department would prohibit point-of-service fees, overdraft or insufficient funds charges, and ATM withdrawal fees.
A second category includes checking accounts or other financial products that are offered on campus or marketed to students under an agreement with the college. For example, some banks offer debit cards that are co-branded with the logo or mascot of a college. Those types of products would be prohibited from charging account access fees or in-network ATM withdrawal fees.
What is the point of having an account if you have to pay to access it? 

Of course, as with so much else it does, the federal government regulations go too far--why shouldn't someone be penalized with overdraft charges?--but other than that these regulations seem both reasonable and overdue.


maxutils said...

Well, you're right --because the interest rates (and fees for accessing your money are essentially interest) violate usury laws. So do the instant loan markets, and car leases. But … if you buy a prepaid card, it should be impossible to overdraw, because the part you overdrew wash't there. That one's on the bank.

Ellen K said...

So I wonder when Congress will weigh in on fees imposed by universities on top of tuition. In many large universities the fees for various programs-many of which average students cannot access-are as large or larger than the tuition bill itself. It's a kind of false advertising to say you charge only so much per semester hour when the real cost is additional fees.