Alumni Association Affinity Programs
The Credit CARD Act
The Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit CARD Act, H.R. 627), which Congress passed and President Obama signed into law in May 2009, includes disclosure requirements for college, university and alumni association credit card agreements.
The disclosure language requires institutions of higher education to "publicly disclose any contract or other agreement made with a card issuer or creditor for the purpose of marketing a credit card." This means that alumni associations housed within colleges and universities will now have to disclose all affinity credit card marketing agreements.
In addition, the law also affects the affinity credit card agreements of alumni associations that are completely separate from their institutions. Specifically, the law requires credit card companies to disclose any marketing agreements with institutions of higher education, alumni associations and affiliated foundations under which credit cards are issued to college students. This means that any card agreement where a student has been issued a card would be subject to disclosure by the credit card company.
In January 2010, the Federal Reserve Board issued final regulations implementing the Credit CARD Act that include information on how colleges, universities and their alumni associations can comply with the disclosure requirements in the law. The final rule clarifies that any alumni association affinity credit card agreement where a student has been issued a card is subject to the law regardless of whether the card was intentionally targeted at or marketed to college students. In addition, for alumni associations housed within their college or university, the final rule states that colleges and universities can fulfill the duty to publicly disclose their affinity credit card agreements/contracts by posting the agreement /contract on the institution's Web site or by making the agreements /contracts available upon request.
Inquiries about Affinity Credit Card Programs
In February 2008, New York Attorney General Andrew Cuomo sent a series of subpoenas to institutions around the country asking for details on their agreements with credit card providers. These agreements, also known as affinity credit card programs, involve an institution or an alumni association granting a bank the right to market the bank's credit card bearing the institution's name and logo to individuals with a close relationship, or affinity, with the institution.
In return, institutions or alumni associations receive a royalty that helps fund alumni programming and services. It is unclear how many college and university alumni associations received subpoenas.
To help alumni associations respond to questions about affinity credit card programs and potential legislation and regulation, CASE has developed the following FAQ.
FAQ: Alumni Associations and Affinity Credit Card Programs
New Targets in Loan Inquiry, Inside Higher Ed, May 2007
New York Legislature Approves Code of Conduct for Colleges and Student-Loan Companies, Chronicle of Higher Education, May 2007
Student Loan Investigation Widens to Include Alumni Associations, Washington Post, May 2007