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Legal battle against off-campus merchant programs causes one Alabama card program to suspend debit card acceptance

In light of a pending lawsuit and stalled legislative relief, Auburn University decided to cancel its off-campus card program until the situation is resolved. Its sister university to the west – the University of Alabama in Tuscaloosa – is holding firm still allowing students to use their campus cards at off-campus merchants.

The lawsuit is filed …

Two merchants last year filed suit against Auburn, claiming they were losing business because they didn’t accept Auburn’s Tiger Card. They also charged that the university was violating a law they believe restricts the university from offering the card acceptance to any vendor with the exception of off-campus bookstores. While the two merchants could have accepted the off-campus card, they claimed the transaction charges were too high, as much as 12%, according to some accounts.

Auburn’s position on the law that supposedly limits off-campus card usage to bookstores only is that while it does govern agreements made with these off-campus bookstores, it does not prohibit the development of relationships with other off-campus merchants.

Legislative change is sought …

A bill was filed by Rep. Alan Boothe of Troy, Alabama, in an effort to clarify the situation. The bill would have explicitly permitted state colleges and universities to operate debit card programs that allow for purchases at off-campus merchants other than bookstores. It would also have allowed them to charge more than the 3.25% transaction fee to merchants other than the off-campus bookstores that would continue to benefit from this fee limit. The bill had plenty of co-sponsors, but nevertheless, didn’t pass this legislative session as it was among a slew of bills that never passed because of lawmakers’ failure to adopt a budget. The Alabama bill will most likely be back, but the earliest it could pass is 2006.

Auburn suspends its off-campus debit program

After several hearings on the lawsuit, Auburn made the decision to disallow off-campus use until the Legislature acted. “We’re not going to spend any more money fighting this little lawsuit,” Auburn general counsel Lee Armstrong told the Associated Press. “We’re going to wait and let the Legislature do its work.” He said the suit did not attack the college’s credit card (ascending balance) plan, only the debit card part of the program, which is what the university is temporarily disallowing for off-campus use.

University of Alambama continues off-campus program

The University of Alabama, which was not involved in the suit, has, so far, decided to keep the status quo.

“UA values our partnership with our local community and have made no changes to our current Bama Cash program which is accepted at both on and off campus merchants,” Jeanine Brooks, Action Card director told CR80News.

“Our local merchants have demonstrated great interest in participating in the program. Bama Cash has become an important student service. It provides our students more accessibility to support local merchants, many times without requiring private transportation. It also provides students with more variety in shopping,” she added.

“UA supports the proposed debit card legislation regarding changes clarifying the right for public institutions of higher education to establish student debit card programs and partner with on- and off-campus merchants,” continued Ms. Brooks.

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