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Can we charge a fee when submitting the following items as unclaimed property: individual retirement accounts, certificates of deposit (CDs), CD interest checks, money orders, and cashier’s checks? – IBA Compliance Connection

IBA Compliance Connection

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Can we charge a fee when submitting the following items as unclaimed property: individual retirement accounts, certificates of deposit (CDs), CD interest checks, money orders, and cashier’s checks?

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We believe you generally may charge “escheat fees” on abandoned property if your customers previously have agreed to such fees in valid contracts. However, you may not charge escheat fees if you do not have agreements in place expressly authorizing such fees, and in the case of money orders and cashier’s checks that have been remitted to a payee, it is unlikely that you would have such an agreement with the payee.

Escheat fees are “any charge imposed solely by virtue of property being reported as presumed abandoned.” The Illinois Revised Uniform Unclaimed Property Act (RUUPA) allows a bank to impose escheat fees that are charged pursuant to a “valid contract [that] authorizes imposition of the charge for the apparent owner's failure to claim the property within a specified time” if the bank “regularly imposes the charge.” Additionally, the contract must specify when an escheat fee will be charged, and the amount of the fee should be “limited to an amount that is not unconscionable considering all relevant factors.”

Consequently, we recommend reviewing any agreements you have in place with respect to the items you listed to determine whether you have a contractual right to charge an escheat fee.

For resources related to our guidance, please see:

  • 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.”)
  • 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.”)