IBA Compliance Connection

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We currently do not disclose dormancy fees or when an account is considered dormant in the terms and conditions for our deposit products. However, we send notice thirty days prior to an account going dormant and another notice after the account has gone dormant. If we add the dormancy fee to both notices and wait until thirty days after the account has gone dormant to charge the fee, is this advance notice sufficient to allow us to charge this dormancy fee?

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No, we do not believe that you may charge a dormancy fee that has not been agreed to by your customer in a valid contract.

The Illinois Revised Uniform Unclaimed Property Act (RUUPA) states that the imposition of dormancy charges or escheat fees must be authorized by customers pursuant to a “valid contract.” Additionally, the account agreement must specify the time in which a dormancy fee will be charged.

As your bank is a national bank, we also note that the National Bank Act generally provides that the establishment of fees is a “business decision[] to be made by each bank, in its discretion, according to sound banking judgment and safe and sound banking principles.”

For resources related to our guidance, please see:

  • Illinois RUUPA, 765 ILCS 1026/15-602(a) (“A holder may deduct a dormancy charge or an escheat fee from property required to be paid or delivered to the administrator if: (1) a valid contract between the holder and the apparent owner authorizes imposition of the charge for the apparent owner’s failure to claim the property within a specified time; and (2) the holder regularly imposes the charge and regularly does not reverse or otherwise cancel the charge.”)
  • Illinois RUUPA, 765 ILCS 1026/15-602(b) (“The amount of the deduction under subsection (a) is limited to an amount that is not unconscionable considering all relevant factors, including the marginal transactional costs incurred by the holder in maintaining the apparent owner’s property and any services received by the apparent owner.”)
  • National Bank Act, 12 CFR 7.4002(b)(2) (“The establishment of non-interest charges and fees, their amounts, and the method of calculating them are business decisions to be made by each bank, in its discretion, according to sound banking judgment and safe and sound banking principles. A national bank establishes non-interest charges and fees in accordance with safe and sound banking principles if the bank employs a decision-making process through which it considers the following factors, among others:

(i) The cost incurred by the bank in providing the service;

(ii) The deterrence of misuse by customers of banking services;

(iii) The enhancement of the competitive position of the bank in accordance with the bank’s business plan and marketing strategy; and

(iv) The maintenance of the safety and soundness of the institution.”)