We believe that you may collect a referral fee for sales of credit monitoring services to your deposit customers, though with some caution, but we do not recommend selling the credit monitoring services to your residential loan customers, due to RESPA’s prohibition on referral fees.

For your deposit customers, we are not aware of any prohibition on collecting a referral fee for sales of a credit monitoring service, and we are not aware of any requirement to disclose the referral fees. However, you should consider the CFPB’s recent guidance and enforcement actions regarding add-on sales of credit monitoring services when selecting the credit monitoring vendor. The CFPB has issued a Bulletin warning credit card issuers about the deceptive marketing of add-on products. Soon after releasing that Bulletin, the CFPB hit several large financial institutions with enforcement actions for improper sales of credit card add-on products provided by third party vendors, including credit monitoring (Capital One, Chase, Discover, American Express, Bank of America). As an example, the Chase enforcement action focused on the fact that customers were paying for credit monitoring services that were never provided, because Chase had not obtained the written authorizations necessary to begin credit monitoring. Due to the CFPB’s focus on third party vendor relationships and credit monitoring providers in particular, we recommend caution in selecting and monitoring the vendor that will be providing the credit monitoring services to your customers.

For your residential loan customers, we do not recommend collecting referral fees for selling credit monitoring services. RESPA prohibits banks from accepting fees, kickbacks, or other things of value in return for referring a “settlement service involving a federally related mortgage loan.” 12 CFR 1024.14(b). A “federally related mortgage loan” includes any loan secured by 1–4 family residential real property or manufactured home. 12 CFR 1024.2. The term “settlement service” includes the “rendering of credit reports and appraisals” when provided “in connection with a prospective or actual settlement [of a federally related mortgage loan] . . . .” 12 CFR 1024.2. Because credit monitoring services involve the rendering of credit reports, they fall into the definition of settlement services. Although the credit monitoring services might not be provided in connection with a loan settlement, we believe that the most conservative approach would be to avoid any sales of the credit monitoring service to residential loan customers.