IBA Compliance Connection

Your go to source for compliance!

We understand that under the Revised Uniform Unclaimed Property Act effective January 1, 2018, a demand, savings, or time deposit account is presumed abandoned three years after maturity or no contact with us, instead of the current five years. Our current fee schedule states that an account becomes dormant after five years of inactivity, at which point it starts incurring a monthly fee. We do not charge any escheat fees. We will need to change our fee schedule to reflect the new three-year abandonment period. Are we required to notify our customers by sending out a revised fee schedule or disclosures?

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Yes, your bank should notify customers about this change at least thirty calendar days before it takes effect (i.e., by December 2, 2017, which is thirty days before the new law’s effective date of January 1, 2018).

Under Regulation DD, a bank must provide at least thirty days advance notice when a change in account terms will adversely affect customers. In our view, a shortened period for triggering dormancy fees would be viewed as adversely affecting your customers.

The required change-in-terms notice may be provided either by providing notice of the changed dormancy period or by providing an entire set of revised account disclosures that includes the new dormancy period. If you choose to note the changed dormancy period rather than sending out an entire set of revised account disclosures, you may do so on your periodic statements or in a separate mailing.

We should note that under the new law, dormancy fees not only must be authorized by your account agreements (as required by current law), but they also must be “regularly” imposed and not regularly reversed or otherwise canceled. Additionally, the dormancy fees must be “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.”

For resources related to our guidance, please see:

  • Regulation DD, 12 CFR 1030.5(a)(1) (“A depository institution shall give advance notice to affected consumers of any change in a term . . . if the change may reduce the annual percentage yield or adversely affect the consumer. The notice shall include the effective date of the change. The notice shall be mailed or delivered at least 30 calendar days before the effective date of the change.”)
  • Official Interpretations, Regulation DD, 12 CFR 1030, Paragraph 5(a)(1), Comment 1 (“Institutions may provide a change-in-term notice on or with a periodic statement or in another mailing. If an institution provides notice through revised account disclosures, the changed term must be highlighted in some manner. For example, institutions may note that a particular fee has been changed (also specifying the new amount) or use an accompanying letter that refers to the changed term.”)
  • Effective January 1, 2018, Revised Uniform Unclaimed Property Act,  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.”)
  • Effective January 1, 2018, Revised Uniform Unclaimed Property Act,  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.”)