If we don’t have an email servicing vendor, do we have to send out notices by email under the new Illinois unclaimed property law? Our account agreements include a statement that customers who sign the agreement are consenting to us sending account notices by email, but not all of our customers have completed full ESIGN consent procedures. What is the penalty for a failure to send a second copy of our due diligence notices by email?

Yes, your bank is required to send due diligence notices by email, based on both the Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA) and the email consent provision in your account agreements.

The Illinois RUUPA requires property holders to send their due diligence notices by regular mail and also by email if the apparent owner “has consented to receive electronic-mail delivery from the holder.” As stated in your question, your account agreements do provide your customers’ consent to have their notices emailed to them, triggering the requirement to send them a second due diligence notice by email (with exceptions when you believe the email address is invalid or the property is valued under $50, or under $1,000 in the case of securities).

The Illinois RUUPA’s penalty provisions generally refer to a failure to report, pay or deliver property; they do not specifically address the failure to send a due diligence notice by email. However, if your bank does not send due diligence notices by email when required to do so, it could forfeit an important protection provided in the Illinois RUUPA against “all liability” claims made by your customers. This liability protection applies only if your institution has complied with all of the Illinois RUUPA’s due diligence notice requirements, including the requirement to send notices by email when applicable.

Note that the Illinois requirement to send due diligence notices by email (when applicable) is not limited to apparent owners who have completed the federal ESIGN Act’s opt-in procedures; it applies to all of your customers who have consented to email deliveries. The ESIGN Act’s opt-in requirements apply only when providing an electronic version of information to satisfy a requirement that the information be provided in writing. But the Illinois RUUPA requires its due diligence notices to be sent both in writing (by mail) and electronically. Because your customers will receive their due diligence notices by mail, it is not necessary for them to have completed the ESIGN Act’s opt-in procedures before they are sent a second due diligence notice by email.

For resources related to our guidance, please see:

Illinois RUUPA, 765 ILCS 1026/15-501(b) (“If an apparent owner has consented to receive electronic-mail delivery from the holder, the holder shall send the notice described in subsection (a) both by first-class United States mail to the apparent owner’s last-known mailing address and by electronic mail, unless the holder believes that the apparent owner's electronic-mail address is invalid.”)

Illinois RUUPA, 765 ILCS 1026/15-501(a) (“Subject to subsections (b) and (c), the holder of property presumed abandoned shall send to the apparent owner notice . . . if: . . . (2) the value of the property is $50 or more.”)

Illinois RUUPA, 765 ILCS 1026/15-501(c) (“The holder of securities presumed abandoned under Sections 15-202, 15-203, or 15-208 shall send to the apparent owner notice . . . if: . . . (2) the value of the property is $1,000 or more.”)

Illinois RUUPA, 765 ILCS 1026/15-1204(a) (“A holder who fails to report, pay, or deliver property within the time prescribed by this Act shall pay to the administrator interest at a rate of 1% per month on the property or value of the property from the date the property should have been reported, paid, or delivered to the administrator until the date reported, paid, or delivered.”)

Illinois RUUPA, 765 ILCS 1026/15-1205(a) (“If a holder enters into a contract or other arrangement for the purpose of evading an obligation under this Act or otherwise willfully fails to perform a duty imposed on the holder under this Act, the administrator may require the holder to pay the administrator, in addition to interest as provided in subsection (a) of Section 15-1204, a civil penalty of $1,000 for each day the obligation is evaded or the duty is not performed, up to a cumulative maximum amount of $25,000, plus 25% of the amount or value of property that should have been but was not reported, paid, or delivered as a result of the evasion or failure to perform.”)

Illinois RUUPA, 765 ILCS 1026/15-604(a) (“. . . A holder that pays or delivers property to the administrator in good faith and substantially complies with Sections 15-501 and 15-502 is relieved of all liability which thereafter may arise or be made in respect to the property to the extent of the value of the property so paid or delivered.”)

ESIGN Act, 15 USC 7001(c) (“ . . . if a statute, regulation, or other rule of law requires that information . . . be provided or made available to a consumer in writing, the use of an electronic record to provide or make available (whichever is required) such information satisfies the requirement that such information be in writing if [among several other requirements] the consumer has affirmatively consented to such use and has not withdrawn such consent; . . .”)