Wednesday, December 12, 2007

Affiliate Marketing or "Kickback"?

You be the judge.

We're all familiar with affiliate/partner marketing in the financial services industry. It's especially prevalent in credit card marketing where it is a common practice for an organization to partner with a credit card provider. The credit card company offers a card "branded" with that organization and markets the personalized card to the organizations' members. Yes, the organization DOES make money from this deal.

This type of affiliate marketing is used by major universities, non-profits, professional sports teams--just about any organization that a consumer might have a strong tie to.

So, here's the question--should a similar plan be used by student loan firms? New York Attorney Andrew Cuomo certainly doesn't think so. On the heels of yesterday's news (see our blog post for our take on this), where a new student lending code of conduct was announced, comes this story from Florida.

Florida Lender to End `Kickback' Ties to Colleges

"Student Financial Services Inc., the Clearwater, Florida, student loan provider, agreed to end revenue-sharing relationships with colleges and their athletic departments, in a settlement with New York Attorney General Andrew Cuomo.

Student Financial Services Inc., which does business under the name University Financial Services, will end what Cuomo called ``a kickback scheme'' with 63 schools and five sports-marketing companies.

The Florida direct marketing company paid the schools for generating loans and for the right to use school names, team names, mascots and logos to advertise directly to students, Cuomo said today in a statement."

Here's my take on this--it seems pretty slimy. If the average student truly believed that the school was behind the student loan, then Cuomo is absolutely right in stopping this activity.

I would love to hear opinions on this? Is this worse than what credit card companies have done for many years, targeting the student market with a credit card branded with their school's logo/mascot?

No comments: