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Cuomo goes after U. on credit cards

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Thursday, March 20, 2008

Andrew Cuomo, New York’s attorney general, has subpoenaed Brown for information on its alumni association’s credit card, the University confirmed in a statement Tuesday.

Colleges and alumni associations often have partnerships with credit card providers. Cuomo and other critics have questioned whether this practice will lead universities to favor these providers when recommending lenders to students looking for loans, according to a Feb. 29 article in the Chronicle of Higher Education.

“The Office of the General Counsel has supplied some initial information to Mr. Cuomo and is currently in the process of completing the University’s response to the subpoena,” Vice President for Public Affairs and University Relations Michael Chapman said in the statement. He declined to comment further.

Cuomo has been investigating universities’ relationships with businesses for the past few months, Benjamin Lawsky, his special assistant, told Newsday on Feb. 27. Cuomo’s office subpoenaed Brown and 14 other colleges and universities in January on their relationships with study-abroad providers.

The investigation has shown that “college campuses were becoming a place where big business was realizing it could basically pay its way to get to a captive audience,” Lawsky told Newsday. Cuomo’s office did not return calls from The Herald.

“Affinity” credit cards, such as the one the Brown Alumni Association offers, bear a university’s logo, and issuing banks make contributions to the university when customers make purchases with the card.

The University’s affinity credit card is offered by Bank of America, according to the bank’s Web site. Betty Riess, a spokeswoman for Bank of America, declined to comment on the subpoena, but said the “vast majority” of affinity cardholders are alums and “other non-students.”

Vice President for Alumni Relations Todd Andrews ’83 declined to comment on the subpoena. Vice President and General Counsel Beverly Ledbetter did not return calls for comment.

Dartmouth received a similar subpoena from Cuomo’s office on Feb. 14, and “a number of other institutions” have also been subpoenaed, Ellen Arnold, Dartmouth’s associate general counsel, told the Chronicle.

“The College is currently reviewing the subpoena and will respond to the Attorney General as appropriate and required by law,” Robert Donin, Dartmouth’s general counsel, said in a statement.

“While we cannot detail the terms of the arrangement … we can confirm that the arrangement does not involve Bank of America gaining student-loan business through Dartmouth,” he said.

Dartmouth’s subpoena asked about the relationship between the bank and the school or its alumni association, and the way it markets the affinity card, Arnold told Newsday.

“There’s absolutely nothing that’s been going on here that I think would trigger their interest,” she told Newsday. “So it appears to me to be part of just a broader initiative to gather information and decide whether they’re going to pursue a claim.”

“Affinity programs are very important to alumni programs at institutions,” said Brian Flahaven, director of government relations for the Council for Advancement and Support of Education. He said universities often use the money they receive to support alumni associations or student scholarships, generating “needed support” for the programs.

Cutting the programs would mean less revenue to universities in a time of concern over rising education costs, he said.

Ending the programs “means resources are being diverted from other programs,” Flahaven said.

Flahaven said Brown could use the subpoena as a chance to “educate and inform lawmakers and regulators” about how the affinity cards support its programs.

He said CASE urges its members to clarify its relationships with banks and draw an obvious line between the service provider and the institution.

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