IBA Compliance Connection

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Is there anything in the new Illinois unclaimed property law that would prevent us from changing our dormancy fees? We currently charge a semiannual fee and will be switching to a monthly fee, with advance notice provided on our periodic account statements.

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No, we do not believe that the Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA) would prevent your bank from changing its dormancy fees as you described — provided that your bank’s customers have contractually agreed to the new fee.

The Illinois RUUPA requires that dormancy fees be charged pursuant to a “valid contract [that] authorizes imposition of the charge for the apparent owner’s failure to claim property within a specified time.” Because the amount and timing of the fee are changing, your bank will have to either enter into new account agreements with your customers imposing the new fee or rely on language in your existing account agreements permitting your bank to unilaterally change account fees (for example, by amending your fee schedule). We cannot comment on whether your existing account agreements permit your bank to modify fees without entering into a new agreement.

We also recommend reviewing your account agreements to ensure that the dormancy fee comports with new requirements in the Illinois RUUPA. Under the Illinois RUUPA, your account agreements must specify the time in which a dormancy fee will be charged, and dormancy fees must be “limited to an amount that is not unconscionable considering all relevant factors.”

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.”)