IBA Compliance Connection

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We flag accounts as inactive after certain periods of inactivity, depending on the account type (but long before five years have passed and the accounts are reported and remitted to the state as abandoned). Some at the bank believe that the best approach is to contact those customers in an effort to remove the “inactive” flag. Are there any reasons why we might want to retain the inactive flag to protect the accounts, by helping us recognize potentially fraudulent activity? We do not charge dormancy or inactivity fees.

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Ultimately, this is a business decision for the bank. We agree that it may benefit customers to retain an “inactive” flag on accounts that are infrequently used to help recognize potentially fraudulent activity. The Interagency Guidelines on Identity Theft Detection, Prevention, and Mitigation state that the use of an inactive account is a red flag for potential identity theft — and without appropriately flagging accounts as “inactive,” your bank may miss this indicator of potentially fraudulent activity.

For resources related to our guidance, please see:

  • Interagency Guidelines on Identity Theft Detection, Prevention, and Mitigation, 12 CFR Part 222, Appendix J (“22. A covered account that has been inactive for a reasonably lengthy period of time is used (taking into consideration the type of account, the expected pattern of usage and other relevant factors).”)