Credit cards emblazoned with the UCLA logo pass through hundreds of hands in Los Angeles and California every day.
But what is seldom known is that the UCLA Alumni Association is compensated by Bank of America every time one of these credit card accounts is opened and outstanding debt is accumulated by a cardholder.
According to an agreement established in 1995, Bank of America pays the UCLA Alumni Association each year for involvement in a program that allows the bank to use the UCLA trademark and solicit alumni, fans, ticket holders or supporters of UCLA by mail, direct promotion, advertisements, Internet and telephone for any of the bank’s credit card, charge card or travel/entertainment card programs.
In the nearly 15 years since the agreement originated, the UCLA Alumni Association has been compensated for disclosing mailing lists to the bank with contact information for alumni, fans and donors. Although other universities are permitted to provide students’ information, all UC schools are prohibited from doing so because of the University of California’s credit card policy, said Ralph Amos, executive director of the UCLA Alumni Association.
UCLA’s alumni association also receives royalties for consumer credit card accounts established through the agreement.
The Alumni Association is given $1 for each new credit card account opened, $3 for each credit card account in which the annual fee is paid by the customer and .0834 percent of any monthly outstanding balance on a credit card account, according to the agreement. Several affinity agreements between Bank of America and universities contain the provision allowing the school to collect royalties from debt amassed on the cards.
Bank payments account for approximately 20 percent of the Alumni Association’s operating budget, which is about $5.2 million each year. Money received through the contract goes toward the operation of the Alumni Association, which includes managing student scholarships, paying for alumni services and producing marketing information, Amos said.
Bank of America has agreements of this nature with more than 700 colleges in the country. In a recent report by the Huffington Post, affinity agreements between banks and universities have come under criticism because of their solicitation of students.
Although 98 percent of the affinity agreements established by Bank of America with universities are with alumni, students are still allowed to sign up through the programs, said Betty Reiss, a spokeswoman for Bank of America.
Some universities, including the University of Pennsylvania and the University of Oklahoma, allow the bank to have greater access to students than others through explicitly stating in their agreements that undergraduate students are to be included as potential customers.
While students can be included as supporters of UCLA and are therefore eligible for the program, the UCLA Alumni Association’s agreement does not clearly name students as prospective members of the program. Amos said the UCLA Alumni Association does not market towards students, but rather primarily targets alumni, fans and donors.
“(University of California), as well as California as a state, took some leadership steps years ago … to preclude or suppress the marketing of credit cards to students at campuses, through tabling and those kinds of things, so that students would have an opportunity to really think about how to build their credit and how to use credit responsibly,” he said.
According to the University of California policy on the marketing of credit cards to students, banks are prohibited from collecting student information on campus for the purpose of a credit card application or offering students gifts that may induce them to participate in a credit card plan.
For UCLA students to sign up for a credit card through Bank of America, they are required to do it at an off-campus location or mail in application materials. However, they are able to sign up at booths set up by the bank at UCLA football games, Amos said.
“Over the years, I think we had less than 100 students sign up at the Rose Bowl,” he said. “It is intended for alumni, but of course a student who is 21 or older can sign-up.”
In 2011, the agreement is up for renewal. Amos said he expects the UCLA Alumni Association to continue with the program.
“We have quite a few cardholders who use the card, so we would like to continue the service because I think they like carrying the cards in their purses and wallets,” he said. “It helps people connect to UCLA in a positive way. Alumni are proud to say “˜I’m a Bruin,’ and this is one way they can do that.”