May 29, 1998
Robbin L. McGregor, Executive Vice President/ Chief Executive
Officer
Riverside Credit Union Service Organization, Inc.
522 South Corona Mall
Corona, CA 91719
Dear Mr. McGregor:
You have asked for a legal opinion regarding whether cellular
telephone services are a permissible CUSO activity or service.
We conclude they are not a permissible CUSO activity or service.
You propose to offer cellular telephone services to Riverside
County Federal Credit Union (FCU) members through your CUSO.
In several letters to you, the Region VI Office informed you that
permissible CUSO activities or services must be associated with
routine credit union operations. We agree with the Region's previously
stated view that a permissible CUSO service or activity needs
to be more than just a convenience for members. Your only argument
for adding cellular telephone services is the speculation that
commuting FCU members could use the cellular telephone to access
the FCU's 24-hour, toll-free telephone access services, including
transferring funds from one credit union account to another and
applying for loans. You base your argument on member convenience
and not upon the daily, routine operations of credit unions.
CUSOs, according to the FCU Act, are to provide "services
which are associated with the routine operations of credit unions."
12 U.S.C. §1757(7)(I). In addition, a CUSO is an organization
that is "established primarily to serve the needs of its
member credit unions, and whose business relates to the daily
operations of the credit unions they serve." 12 U.S.C. §1757(5)(D).
To provide guidance in defining the boundaries of permissible
CUSO services, NCUA provided a list of these daily, routine services
of need to credit unions in its prior CUSO regulation. 12 C.F.R.
§701.27(d)(5). In the recently revised CUSO rule, the list
of permissible activities and services is substantially the same
as in the prior rule. 12 C.F.R. §712.5 published at 63 Fed.
Reg. 10743 (March 5, 1998). Neither the prior nor the current
CUSO rule include cellular telephone sales and services as a permissible
CUSO activity.
Although telephones can be used to access an FCU's services through
a telephone account transfer or billpayer service, the sale and
provision of telephones and telephone services are not related
to the daily, routine operations of FCUs. Therefore, cellular
telephone services are not a permissible CUSO activity.
Sincerely,
Sheila A. Albin
Associate General Counsel
GC/MSC:sg
SSIC 3501
97-1032
cc: Office of Examination and Insurance
Region VI