Under the Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA), we are not required to notify customers about abandoned cashier’s checks, money orders, or certificate of deposit interest checks with values below $50. If the payee on one of these types of checks has an active deposit account at our bank, may we credit the amount of the abandoned item to the deposit account, or must it escheat to the state?

We do not believe that the Illinois RUUPA would allow a bank to credit amounts due under abandoned items to the customer’s deposit account in order to avoid remitting those items to the Treasurer, and we do not recommend this practice for the reasons discussed below. While you are correct in stating that you are not required to notify customers of abandoned property if its value is below $50, such property still must be reported and remitted to the Illinois Treasurer.

A provision in the Illinois RUUPA does prevent inactive accounts from being presumed abandoned when the account owner has directed certain activity in other accounts at the same financial institution (provided that the mailing address is the same for both the inactive account and the active account). However, this provision does not apply to cashier’s checks, money orders, and certificate of deposit (CD) interest checks. As confirmed in informal guidance we received from the Illinois Treasurer’s office, this provision applies only to accounts and not to other property types, such as cashier’s checks, money orders, and CD interest checks.

We do not recommend unilaterally crediting your customers’ deposit accounts with amounts due under cashier’s checks, money orders, and CD interest checks. Presumably these deposits would occur without the payee’s consent or endorsement, which could put your bank at risk of liability for conversion. Illinois courts have stated that banks can be liable for conversion when they assume control, dominion, or ownership over customer’s funds wrongfully and without authorization. Although your customers own the accounts you would be crediting, the funds credited could become subject to certain bank rights, such as setoff or freezing, which if asserted could allow for a potential conversion claim.

Additionally, if your bank credits a customer’s account for a cashier’s check, money order, or CD interest check and later refuses to pay the item when presented by your customer, you could risk a wrongful dishonor claim under the UCC for your bank’s failure to pay a properly payable item.

For resources related to our guidance, please see:

Illinois RUUPA, 765 ILCS 1026/15-501(a) (“The holder of property presumed abandoned shall send to the apparent owner notice by first-class United States mail that complies with Section 15-502 in a format acceptable to the administrator not more than one year nor less than 60 days before filing the report under Section 15-401 if: . . . (2) the value of the property is $50 or more.”)

Illinois RUUPA, 765 ILCS 1026/15-603(a) (“Except as otherwise provided in this Section, on filing a report under Section 15-401, the holder shall pay or deliver to the administrator the property described in the report.”)

Illinois RUUPA, 765 ILCS 1026/15-210(f) (“If the apparent owner has another property with the holder to which Section 201(6) applies, then activity directed by an apparent owner in any other accounts, including loan accounts, at a financial organization holding an inactive account of the apparent owner shall be an indication of interest in all such accounts if:

(A) the apparent owner engages in one or more of the following activities:

(i) the apparent owner undertakes one or more of the actions described in subsection (b) of this Section regarding any account that appears on a consolidated statement with the inactive account;

(ii) the apparent owner increases or decreases the amount of funds in any other account the apparent owner has with the financial organization; or

(iii) the apparent owner engages in any other relationship with the financial organization, including payment of any amounts due on a loan; and

(B) the foregoing apply so long as the mailing address for the apparent owner in the financial organization’s books and records is the same for both the inactive account and the active account.”)

Cruthis v. Firstar Bank, N.A., 354 Ill.App.3d 1122, 1131–32 (5th Dist. 2004) (“Conversion is an unauthorized act that deprives a person of his property permanently or for an indefinite time. . . . To prove the tort of conversion, ‘a plaintiff must establish that (1) he has a right to the property; (2) he has an absolute and unconditional right to the immediate possession of the property; (3) he made a demand for possession; and (4) the defendant wrongfully and without authorization assumed control, dominion, or ownership over the property.’ Illinois courts have sustained a plaintiff’s cause of action for conversion against his or her bank.”)

Illinois UCC, 810 ILCS 5/4-402(a) (“Except as otherwise provided in this Article, a payor bank wrongfully dishonors an item if it dishonors an item that is properly payable, but a bank may dishonor an item that would create an overdraft unless it had agreed to pay the overdraft.”)

Illinois UCC, 810 ILCS 5/4-402(b) (“A payor bank is liable to its customer for damages proximately caused by the wrongful dishonor of an item. . . .”)