It all started as a way to make some quick cash. In 2002, at the beginning of his freshman year at the University of Pittsburgh, Ryan Rhoades needed some extra spending money.
So when his friend told him about an Internet ad offering Pitt students a way to make some cash in a couple of hours, he didn't hesitate. Rhoades rounded up some of his buddies and headed over to the designated classroom at the student union.
What he saw in that room offers a view of how creative credit card companies have become in marketing their services to college students.
An enthusiastic man who identified himself as a representative of Citibank welcomed them and said they had the opportunity to make some money by signing up their fellow students for credit cards. The bounty for each completed application would be $5 to $10, depending on the kind of card.
In retrospect, Rhoades feels like he and his fellow students were being recruited to become credit card pushers. "That's exactly what it was," he says.
Salesmen at the gatesRhoades took the job and signed up roughly 30 students for cards. He regrets any trouble he caused other students from his actions.
Still, his actions may have been most damaging to himself. He ended up with $13,000 worth of debt that he is now struggling to repay.
"I hadn't learned anything about credit cards in high school, and I didn't know anything about them at the time," says Rhoades. "I was duped."
Politicians and college administrators are growing increasingly concerned about the damage that credit card debt is causing students, and they're trying to crack down on some of the card companies' practices. They're limiting marketing on some campuses and trying to restrict the size of credit lines extended to students. Earlier this year, state legislatures in Texas, Oklahoma and New York moved to clamp down on credit card marketing to college students.
As the restrictions grow, however, so too do the creative tactics marketers use to circumvent these efforts. At Columbia University in New York City, the school banned credit card solicitations on campus. But a spokesman says the prohibition may not be that effective because the card companies set up "right outside the gates" to the school grounds.
At the University of Michigan and nine other schools, JPMorgan Chase contracted with BicyTaxi, a company based in New York, to offer students free bike-taxi rides around town. Once inside the vehicles, students are greeted with a piped-in recording promoting Chase's student credit card program, Chase+1.
Getting close to studentsAs for the University of Pittsburgh, the school had barred marketers from dormitories by 2002. But Rhoades, unaware of the restriction, marched right through the dorms to sign up his fellow students. He says he did so on his own, without discussing it with Citibank's representative. A university spokesman declined to comment for this story.
A spokeswoman for Citibank says the company has voluntarily pulled back from marketing on college campuses. She won't specify which year the company made the decision but says it no longer allows employees or any company it contracts with to solicit students on school grounds.
"Citi does not conduct direct sales marketing on college campuses," she wrote in an e-mail. Citibank also says that it has strict guidelines for third-party vendors and that it would never condone violations of school policies.
That doesn't mean that Citibank doesn't market to college kids. The company has a specially designated card for students. And it actively markets its services near college campuses. Edward Solomon is chief executive of Campus Dimensions, which contracts with banks to market credit cards to college students. He says his company plans to visit 1,000 schools this fall to promote cards for Citibank and U.S. Bank. In both cases, his company will work to steer clear of school grounds but stay close enough to attract students. "It's mostly about positioning yourself in a high-traffic area," he says.