AO 2014-09: Consulting firm may market credit card affinity program to political committees

A consulting firm may partner with banks to develop and market an affinity credit card program for political committees. The firm would offer individuals listed on the committees’ mailing lists credit cards that provide monthly rebates on purchases. The individuals would have the option to designate those rebates as contributions to the committee. Since this activity is in the ordinary course of business of the consulting firm, the recipient political committees would be required to pay the usual and normal cost of such services, and any funds contributed under the program would be the exclusive property of the cardholders, the Commission concluded that the proposed affinity program is permissible.

Background
REED Marketing Consultants, Inc. (RMC) is a consulting firm that specializes in financial services and credit card businesses. RMC proposes to develop and market an affinity credit card program between banks and political committees, including national party committees.

In general, an affinity program is a relationship between a business that offers a product or service and an organization (such as a charitable organization or a political committee) that endorses or sponsors the business’ product or service to its members, supporters or other interested persons.

Under the proposal, RMC will market the banks’ credit cards to individuals on the committees’ mailing lists and inform them that he or she has prequalified for a credit card that will offer them monthly rebates. The cardholders will then have the option to receive the rebates in cash or to designate the rebates as contributions to the political committee.

If cardholders choose to forward their rebates to a committee as contributions, the issuing bank will remit the rebate directly to the committee. RMC will not receive, handle or process rebates or contributions. Any required contributor information acquired during the application process will be forwarded to the recipient political committee.

RMC maintains that its proposed affinity credit card program is similar to other programs that it provides to non-political organizations and businesses. Political committees that participate in this program will provide, as compensation to RMC, use of the committee’s mailing list and trademarks; an acquisition fee for each new cardholder; and a monthly administration fee.

Analysis
The Federal Election Campaign Act (the Act) and Commission regulations prohibit corporations from making any contribution to federal candidates or political committees, which includes anything of value. 2 U.S.C. §441b(a) and 11 CFR 114.2(b)(1). “Anything of value” includes all in-kind contributions, including the provision of goods or services without charge or at less than the usual and normal charge. 11 CFR 100.52(d)(1). “Usual and normal charge” is defined as the price of goods in the market from which they ordinarily would have been purchased at the time of the contribution, or the commercially reasonable rate prevailing at the time the services were rendered. 11 CFR 100.52(d)(2).

Corporations are also prohibited from “facilitating the making of contributions” to political committees, which means using corporate resources or facilities to engage in fundraising activities in connection with federal elections, unless the corporation provides the goods or services as a “commercial vendor” in the ordinary course of business at the usual and normal charge. 11 CFR 114.2(f). Commission regulations define a commercial vendor as “any person providing goods or services to a candidate or political committee whose usual and normal business involves the sale, rental, lease, or provision of those goods or services.” 11 CFR 116.1(c).

Usual and normal charge – In its proposed affinity credit card program, RMC would provide several services to a political committee such as marketing the program to individuals on the committee’s mailing list, establishing a relationship between the issuing banks and the committee and forwarding contributor information. RMC states that it markets similar arrangements with other organizations and businesses that are not political in nature and that RMC would also receive fees from the committee that reflect the usual and normal charge for RMC’s services. Based on these facts, the Commission concluded that RMC would be acting as a commercial vendor and that by providing the services to the committee, RMC would neither make, nor facilitate the making of contributions to the committee.

Rebates as contributions – In approving other affinity programs where a rebate or reward was offered to individual customers, the Commission has found the rebate to be the property of the individual rather than of the corporate affinity partner. See AOs 2010-06 (Famos) and 2003-16 (Providian National Bank). RMC’s rebate proposals would similarly be offered to cardholders in the ordinary course of business and the rebates would be the exclusive property of the cardholder. Since neither RMC nor the bank issuing the rebate would have any control over a cardholder’s discretion to designate them as contributions, the proposed affinity program is permissible.

Solicitation disclaimers – As the Act and Commission regulations require that solicitations of contributions by any person to a political committee include certain disclaimers, RMC has stated that it will include any required disclaimers in the marketing materials of the program that are sent to potential cardholders. See AO 2006-34 (Working Assets).

Date issued: August 14, 2014; Length: 5 pages.

Resources:

• Advisory Opinion 2014-09 [PDF]