Compliance with Credit CARD Act of 2009

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 affinity agreements.

Below are FAQ’s related to alumni association affinity credit card programs, taken from the Council for Advancement and Support of Education (CASE) www.case.org.


Q: What are affinity credit card programs and what is their relationship to alumni associations?
A: Many college and university alumni associations have affinity credit card programs that give graduates the option of using a credit card bearing the name and logo of their alma mater. To offer an affinity card, the alumni association engages in a contractual agreement with a bank that gives the bank the right to market the card to individuals who have a close relationship with an institution, such as alumni. A number of not-for-profit organizations, including AARP and the American Bar Association, offer affinity cards.

Q: What does the alumni association get out of affinity agreements?
A: First and foremost, they strengthen their relationships with alumni by offering them a valuable service. In addition, banks usually pay the association a "royalty" fee for use of the institution's name and logo. Some associations also receive financial benefits when individuals use the affinity credit cards. The financial benefits provide resources the institution would not otherwise have to offer alumni programs, provide scholarships or serve graduates or students in other ways.

Q: Do graduates who use credit cards associated with their institution know that the institution is receiving a financial benefit?
A: Yes. The opportunity to support the institution or its alumni association is one of the primary reasons graduates select and use affinity cards over other credit cards. Graduates also use the cards to demonstrate their pride in their alma maters.

Q: What's wrong with these arrangements?
A: There is nothing inherently wrong with alumni associations' affinity credit card programs, which are similar to affinity card programs offered by many other nonprofit organizations, and there has been no evidence of related impropriety. In fact, these programs benefit graduates, associations and institutions by generating resources that otherwise would not be available to serve alumni and sometimes students.

Q: Why, then, are these programs under some scrutiny?
A: Recent controversies regarding the relationship between student financial aid offices and "preferred" private lenders have led lawmakers and regulators to examine other relationships between colleges and universities and the companies that do business with their institutions.

Government officials want to make sure that colleges and universities are not engaged in questionable practices or potential conflicts of interest.

Policymakers are also concerned about the level of student credit card debt and whether colleges are encouraging students to take on more debt than necessary through their affinity credit card programs.

Q: Is the government attempting to regulate these agreements?
A: The Credit Card Accountability Responsibility and Disclosure Act of 2009 (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.

Q: What are alumni associations doing to address this issue?
A: First, with encouragement from their professional associations, they are reviewing all of their affinity programs to be sure they continue to operate in a manner consistent with professional standards, institutional policies and the mission of the association. They are also working hard to ensure that alumni who participate in affinity programs understand clearly the relationship between the association and the service provider. And they are trying to inform their members, government officials and the public at large about the value of affinity programs and about the harm that could be done by over-regulating programs that have benefited their institutions for many decades.

To request a copy of the University of Minnesota Alumni Association’s credit card agreement with Bank of America, please send a written request to:
The University of Minnesota Alumni Association
Attn: CFO – Dan Garry
McNamara Alumni Center
200 Oak Street SE, Suite 200
Minneapolis, MN 55455

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