IBA Compliance Connection

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Prior to a deposit account being considered abandoned under the Illinois Revised Uniform Unclaimed Property Act (RUUPA), can we charge a dormancy fee when the customer has agreed to pay all fees on our current fee schedule? Our fee schedule contains the dormancy fee but not the time at which it will be imposed. Information regarding timing for the fee is contained in a notice.

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No, we do not believe that your bank may charge a dormancy fee, as the time for imposing the fee does not seem to be described in your account agreement and other incorporated documents (such as a fee schedule), as required by the Illinois Revised Uniform Unclaimed Property Act (RUUPA) and fundamental principles of contract law. 

We believe that the Illinois RUUPA’s fee requirements apply to both escheat and dormancy fees. The fee requirements in Section 15-602 apply to “a dormancy charge or an escheat fee.” While the term “dormancy charge” is not defined, it appears to be a distinct concept from escheat fees, which are defined as “any charge imposed solely by virtue of property being reported as presumed abandoned.” Consequently, we believe that the Illinois RUUPA’s fee requirements apply to dormancy charges that are charged before property is presumed abandoned and remitted to the Treasurer. 

Additionally, we generally do not recommend charging fees that have not been fully disclosed and agreed to in account agreements. As noted in an Illinois case, the relationship between a bank and its customers is contractual in nature, and we believe that all fees that are charged should be governed by contract. As the time for imposing your dormancy fee seems to be established solely by notice — and not by contract — we do not believe that imposition of the fee has been properly agreed to by your customers.

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 1026/15-102(8.5) (“‘Escheat fee’ means any charge imposed solely by virtue of property being reported as presumed abandoned.”)
  • Symanski v. First Nat. Bank of Danville, 242 Ill.App.3d 391, 394 (4th Dist. 1993) (“It is a fundamental principle of banking law that the relationship between a bank and its depositor is created and regulated by the express or implied contracts between them.”)