Despite the two-year-old federal legislation to protect young consumers, college-age adults remain easy prey for credit card companies, which have moved off campus and onto Facebook.

A recent analysis by University of South Carolina law professor Eboni Nelson provides a look at the effectiveness of the Credit Card Accountability Responsibility and Disclosure Act of 2009 (the CARD Act) in protecting young adults. It appears in the April issue of the Banking & Financial Services Policy Report.

"The CARD Act's provisions for young consumers have been a step in the right direction, but more action is needed to protect college-age adults," Nelson says. "Card companies continue to see consumers who are under age 21 as a profitable market and, as a result, they strategically have found ways to solicit the college-age crowd, including through social media."

Nelson, who researches and teaches consumer and higher-education law, found several aggressive marketing practices and lax eligibility requirements by credit card companies despite the protections put in place by the law.

In early March, the Federal Reserve Bank of New York released a report showing that Americans owe more on their student loans to the tune of $870 billion, compared with credit card debt of $693 billion.

Nelson says the CARD Act, administered by the new Consumer Financial Protection Bureau (CFPB), curbed a variety of predatory practices that had been commonplace on U.S. college campuses.

Those practices included sending unsolicited credit card offers to students, based on information that the companies got from credit reporting agencies. Financial institutions also set up tables for giving away hats, shirts, and other items to entice students to complete applications. In addition, they signed compensation agreements with colleges or alumni groups to obtain member lists and to extend credit to young consumers who had no ability to pay it back.

Analyzing data from the financial industry, government and higher education, and reviewing news reports, Nelson found that credit card companies restricted from some of these practices found new ways of targeting college-age students.

Banned from using credit information to find potential applicants, companies have turned to the mailing lists of colleges themselves and rewards and loyalty programs to find young borrowers, Nelson says.

Marketers, banned from marketing with tables on campus, have relocated to nearby off-campus locations and online via social media, such as Facebook, where they are offering promotional items and discounts, along with reward points and promotional credit terms, she says. And colleges and alumni associations continue to enter into financial partnerships, although greater transparency and restrictions have led to fewer agreements, payments by issuers, and new accounts.

A 2010 survey showed 76 percent of University of Houston students reporting having received a credit card offer since 2009.

Perhaps most disturbing of practices by card companies is letting college students use student loan proceeds as proof of independent income on credit card applications, Nelson says.

"The CARD Act stipulates that consumers under age 21 must show they can pay the bill themselves or must have a co-signer. However, it is unclear what resources can be used as current income. What this means is that savings accounts, allowances, stipends, grants, student loans, and scholarships can be used," Nelson says. "Also, the ability to pay only means the ability to pay the minimum monthly payments, which can be as low as $25. It doesn't mean the ability to pay the total amount of the debt."