The department was asked by a charitable organization whether credit cards issued by State banks could be used by the holders to make charitable contributions.

Section 96(1) of the Banking Law empowers such banks to “discount, purchase and negotiate __ obligations in writing to pay in installments or otherwise all or part of the price of personal property or that of the performance of services __” Retail installment credit agreements, the type commonly entered into between credit card holders and issuing banks, are defined in section 401(8) of the Personal Property Law as those “pursuant to which the buyer promises to pay, in installments, his outstanding indebtedness from time to time to a retail seller __ for one or more items of goods or services __” (emphasis supplied). Similar references to such agreements as intended for purchases or leases of property or services from retail sellers are found in section 413(11) of the same law.

The department observed that credit card transactions, other than those effecting cash borrowings, which do not discharge an enforceable indebtedness for goods or services would be improper under the quoted statutes. However, the department also noted that courts in this State have held that promises to contribute to charity may be enforceable—for example, where the charity has incurred liability in reliance on the promise; thus payments by credit card in respect of such obligations could be regarded as discharging indebtedness. Moreover, for purposes of the Personal Property Law, the department could see no grounds for opposing the further view, if the relevant parties in interest chose to adopt it, that consideration for the promise to contribute included not only reliance by the charity on receiving the amount pledged but also the rendering of goods or services or both by the charity to the objects of its beneficence, even if the same did not include the donor. It was a persuasive analogy between such a characterization and the enforceability, never questioned to its knowledge, of credit card obligations incurred by one person, in advance, for a gift of goods or services to another.

Thus the department concluded that it would interpose no regulatory objection to the practice in question insofar as legally enforceable promises to contribute to the rendering by charities of goods, services or both were concerned.

DATED: February 1, 1974