CFPB Issues Affinity Credit Card Report to Congress: How Nonprofits Can Minimize Their Legal and Tax Risk

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Affinity credit cards continue to be significant revenue generators for colleges and universities (and their affiliated organizations), associations and many other types of nonprofit organizations. The federal Consumer Financial Protection Bureau (“CFPB”) recently released its 2012 Annual Report to Congress on College Credit Card Agreements (the “Report”), as well as a database where individual agreements are stored. The Report is a good reminder of how important affinity programs can be for some nonprofits, and also provides a good opportunity to revisit the relevant legal and tax issues. Below, we outline the highlights of the Report, and then discuss some important considerations and practices that can help nonprofits minimize their legal and tax risk from affinity programs of all types.

Affinity Credit Cards Are Big Business -

In 2011, the CFPB received 798 college credit card agreements from 21 credit card issuers; information and analysis regarding these agreements is set forth in the Report. The Report demonstrates that the majority of college credit card agreements are between issuers and affiliated organizations, such as fraternities, sororities, alumni associations, or foundations affiliated with or related to an institution of higher education (“affiliated organizations”). The database contains credit card agreements from more than 700 card issuers.

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