OGC Legal Opinion

September 28, 2012

OGC Legal Opinion 11-0965 Video Teller Machines

The Office of General Counsel (OGC) Legal Opinion 11-0965 addresses whether video-teller machines meet the definition of a “service facility” as that term is used in NCUA’s Chartering and Field of Membership Manual (Chartering Manual). The OGC concluded that video-teller machine meeting certain criteria would qualify as a service facility under the federal credit union (FCU) Chartering Manual. The issue is important for FCUs because NCUA rules require geographically proximate "service facilities" as a pre-requisite for a multiple common bond FCU to add a select group or an underserved area to its field of membership.

This issue, and the legal opinion, are specific to FCUs. States laws vary.

The OGC notes that the definition of service facility is different for additions of select groups than for additions of underserved areas.

For underserved areas, the definition of “service facility” is more limited, allowing fewer kinds of facilities to qualify. For underserved areas, a service facility includes credit union-owned electronic facilities that take deposits, accept loan applications, and disburse loans. Credit union branches, shared branches, mobile branches, and offices operated on a regularly scheduled weekly basis also meet the underserved area criteria for a service facility. An interest in a shared branching network, ATMs, and websites do not meet the criteria for a service facility in an underserved area.

The OGC determined that a video-teller machine would satisfy the service facility requirement for underserved communities if it met the following requirements:

Provided real-time, face-to-face video access to live tellers at regularly scheduled weekly hours;

  • Used credit union employees or local shared branch employees as the tellers appearing on the screen;
  • Allowed members to conduct all the transactions available when visiting a service facility of another sort permitted by NCUA rules; and
  • Was in a physical location within an underserved area or a physical location in reasonable proximity to the group being served for group additions.

For group additions, FCU-owned electronic facilities that accept deposits, take loan applications, or disburse loans are service facilities, including ATM machines. Also, credit union-owned branches, mobile branches, and offices operated on a regularly scheduled weekly basis meet the criteria for service facilities. A video-teller machine meets this standard.