National bank engaged in issuance of retail and business credit cards may expand services to add loss notification and credit monitoring services to its product offerings. Loss notification services would include notifying of lost or stolen cards and requesting card reissuance. Credit monitoring services include credit scores, credit reports, credit monitoring, access to credit advisory consultants, access to social security, medical and motor vehicle records.

O

Comptroller of the Currency

Administrator of National Banks

Washington, DC 20219

August 12, 2002 Interpretive Letter #944

September 2002

12 USC 24(7)

Subject: Proposed Loss Notification and Credit Monitoring Services

Dear [ ]:

This is in response to your letter, transmitted via e-mail on June 27, 2002 to Richard Erb,

Licensing Manager, Large Bank Supervision, regarding the proposal of [

], [ City, State ] (“Bank”) to engage in certain loss notification and credit monitoring

services. In particular, you seek the OCC’s concurrence with your view that the proposed

activities are incidental to the business of banking under 12 U.S.C. § 24(Seventh) and therefore

permissible for a national bank.

Facts

The Bank, which specializes in the issuance of retail and business credit cards, proposes to add

loss notification and credit monitoring services to its product offerings. Initially these services

would be offered solely to the Bank’s cardholders. At some later time, the Bank may also offer

these services to cardholders of other issuers and to the general public. Customers would pay a

monthly charge for each service. In the case of the Bank’s own cardholders, such charges would

appear on the regular monthly billing statement.

Customers who purchase the Bank’s loss notification services would be able to register all their

credit, debit, ATM and telephone calling cards with the Bank. Participating customers whose

cards were lost or stolen would then be able to notify the Bank of the loss or theft and the Bank

would then (a) notify the issuers of all the lost or stolen cards and (b) request that the cards be

canceled or reissued. Through this process, the customers would receive full protection from

their respective card issuers for fraudulent charges

cards with the Bank. Participating customers whose

cards were lost or stolen would then be able to notify the Bank of the loss or theft and the Bank

would then (a) notify the issuers of all the lost or stolen cards and (b) request that the cards be

canceled or reissued. Through this process, the customers would receive full protection from

their respective card issuers for fraudulent charges. They would also be eligible for emergency

cash advances.

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Customers who purchase the Bank’s credit monitoring services would also be able to obtain, at

any time, the following products or services:

(a) a merged triple credit bureau report (i.e., from the three major credit bureaus);

(b) a current credit score;

(c) monthly monitoring of their credit record for new accounts, inquiries and derogatory or

adverse information;

(d) access to their Social Security account to confirm accurate Social Security deductions by

past and present employers;

(e) access to medical information about them on file at the Medical Information Bureau,

including health information used by insurance companies;1

(f) access to records of their motor vehicle violations, including points and dates by which

points should be removed from their drivers license records; and

(g) access to credit advisory consultants.

The Bank currently offers these services, provided by nonaffiliates, to its own cardholders

pursuant to its authority to act as a finder under 12 C.F.R. § 7.1002. However, the Bank would

like to bring these services in-house.

Analysis

The OCC has traditionally recognized the authority of national banks to organize and perform

any of their lawful activities in a reasonable and convenient manner not prohibited by law. A

national bank may engage in all activities that are part of or incidental to the business of banking.

12 U.S.C. § 24(Seventh). In NationsBank of North Carolina, N.A., v. Variable Life Annuity Co.,

513 U.S

The OCC has traditionally recognized the authority of national banks to organize and perform

any of their lawful activities in a reasonable and convenient manner not prohibited by law. A

national bank may engage in all activities that are part of or incidental to the business of banking.

12 U.S.C. § 24(Seventh). In NationsBank of North Carolina, N.A., v. Variable Life Annuity Co.,

513 U.S. 251 (1995), the Supreme Court held that the “business of banking” is not limited to the

enumerated powers in 12 U.S.C. § 24(Seventh), but rather encompasses activities that are part of

the business of banking. Id. at 258. The Court further established that banks may engage in

activities that are incidental to the enumerated powers as well as the broader “business of

banking.”

The OCC determined a number of years ago that loss notification services such as those

proposed by the Bank are incidental to banking.2 Since the issuance of credit cards has long

1 The Medical Information Bureau is a non-stock, not-for-profit membership association, organized under Delaware

law, of approximately 600 U.S. and Canadian insurance companies. According to its website (www.mib.com), its

purpose is to “detect and deter attempts by applicants of life, health, disability or long-term insurance who would

omit or misrepresent facts.” It maintains a database that assigns codes to a wide variety of medical conditions and

other factors, such as adverse driving records and participation in hazardous sports, that might affect an individual’s

insurability. Member companies report to the bureau information they obtain about any insured person or insurance

applicant that is considered significant to the person’s risk classifications, and often check the bureau’s database

before approving an insurance application.

2 See Letter from Jonathan L. Levin, Senior Attorney (March 15, 1985) (unpublished); Letter from John E. Shockey,

Deputy Chief Counsel (Sept

companies report to the bureau information they obtain about any insured person or insurance

applicant that is considered significant to the person’s risk classifications, and often check the bureau’s database

before approving an insurance application.

2 See Letter from Jonathan L. Levin, Senior Attorney (March 15, 1985) (unpublished); Letter from John E. Shockey,

Deputy Chief Counsel (Sept. 18, 1975) (unpublished).

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been determined to be a proper activity for national banks, ancillary activities such as loss

notification and providing emergency loans are a logical outgrowth of those services.

The OCC has also consistently stated for many years that the operation of a credit bureau is

incidental to banking and thus permissible for national banks.3 In addition, it has determined that

providing credit verification incidental to the issuance of credit cards is permissible.4 If it is

permissible for a national bank to operate a credit bureau, then it is clearly also permissible for

the bank to provide directly to its customers those services that are performed by a credit bureau

or are a logical outgrowth of credit bureau activities, i.e., credit reports, credit scores, and

monitoring of credit records. Providing access to credit advisory consultants is well within a

national bank’s longstanding authority to offer financial counseling. 12 C.F.R. § 5.34(e)(5)(v)(I);

OCC Interpretive Letter No. 137, reprinted in [1981-1982 Transfer Binder] Fed. Banking L.

Rep. (CCH) ¶ 85,218 (December 27, 1979).

While the other services proposed to be offered by the Bank (providing customers with access to

their Social Security, medical, and motor vehicle records) are not viewed as strictly banking,

financial or related economic information, the inclusion of these services along with the other

credit monitoring services is permissible

Binder] Fed. Banking L.

Rep. (CCH) ¶ 85,218 (December 27, 1979).

While the other services proposed to be offered by the Bank (providing customers with access to

their Social Security, medical, and motor vehicle records) are not viewed as strictly banking,

financial or related economic information, the inclusion of these services along with the other

credit monitoring services is permissible. The OCC has long held that, under their incidental

powers, national banks may sell non-banking products and services when reasonably necessary

to provide banking products on a competitive basis by creating a package of related services

needed to satisfy consumer demand, meet market competition, and enable the national bank

successfully to market its services. See, e.g., OCC Interpretive Letter No. 928, reprinted in

[Current Transfer Binder] Fed. Banking L. Rep. (CCH) ¶ 81-453 (December 24, 2001).5 In this

case, the inclusion of these other records as part of the credit monitoring services to be offered by

the Bank will make the overall package more attractive and useful to customers by providing

them with a single convenient source through which to gain access to a wide variety of personal,

financial and other files.

Conclusion

The loss notification and credit monitoring activities described in your letter are permissible

under 12 U.S.C. § 24(Seventh) because they are part of or incidental to the business of banking.

Sincerely,

-signed-

Sue E. Auerbach

Counsel

Bank Activities and Structure Division

3 See, e.g., OCC Conditional Approval No. 336 (Nov. 2, 1999); OCC Conditional Approval No. 276 (May 8, 1998);

Letter from John E. Shockey, Deputy Chief Counsel (May 18, 1976) (unpublished).

4 See Letter from Richard V. Fitzgerald, Director, Legal Advisory Services Division (Jan. 25, 1979) (unpublished).

5 See also OCC Interpretive Letter No. 653, reprinted in [1994-1995 Transfer Binder] Fed. Banking L. Rep. (CCH)

¶ 83,601 (Dec

No. 336 (Nov. 2, 1999); OCC Conditional Approval No. 276 (May 8, 1998);

Letter from John E. Shockey, Deputy Chief Counsel (May 18, 1976) (unpublished).

4 See Letter from Richard V. Fitzgerald, Director, Legal Advisory Services Division (Jan. 25, 1979) (unpublished).

5 See also OCC Interpretive Letter No. 653, reprinted in [1994-1995 Transfer Binder] Fed. Banking L. Rep. (CCH)

¶ 83,601 (Dec. 22, 1994).