Financial institutions, like other entities, must comply with state unclaimed property laws, which include sending customers due diligence notices and reporting dormant accounts to the states on an annual basis.
Banking property, including checking accounts, savings accounts, and certificate of deposits are considered dormant absent owner-generated activity within a period of time defined by the state (typically 3 or 5 years). The recent adoption by several states of revised unclaimed property laws modeled on the 2016 Revised Uniform Unclaimed Property Act (RUUPA) and the continued introduction of similar legislation (North Dakota and Indiana in early January 2021), illustrates the ever-changing nature of these laws and the need to monitor legislative changes. States adopting a “RUUPA” – like law may adopt the shorter dormancy period (3 years) for most property types, alter the 60-180 due diligence timeframes and/or add the requirement that notice be sent to the owner via first class mail and email (if the owner has consented to electronic mail communications from the holder).
Taking a proactive approach to the escheatment process by communicating early and often with your customers decreases the population of reportable property, meaning less costs associated with due diligence (certified mail, return receipt requested, is required in some states, particularly above a certain dollar threshold) and with the reporting process itself.The due diligence letter is the last attempt to reach inactive customers before you must report the property as unclaimed and state-imposed timeframes tend to be towards the end of the dormancy period, leaving little time to connect with customers. And because many states require specific language to be included in the letter, the formal language may appear out of place, and the letter can easily be tossed aside or disregarded altogether. Conducting reviews of inactive accounts early, combined with outreach campaigns by phone, mail, or email, allows you to control the narrative and improves your chances of successfully reactivating an account. Integrating your inactivity outreach with web-based portal software and/or interactive voice response (IVR) systems also makes it easier for your customers to respond in a timely manner.
Jon D’Amato, Managing Partner at MarketSphere Unclaimed Property Specialists, recently wrote an article for Forbes that demonstrates how a proactive approach is a more than just a cost savings approach. It allows financial institutions to increase customer retention rates and assets under management, while minimizing reputational risk and unclaimed property liability.
Contact MarketSphere to learn more about proactive owner outreach options and to discuss unclaimed property compliance questions or challenges your organization is facing. MarketSphere serves as partners and advocates providing personalized services and implementing Just Right Compliance® solutions.
*Content contained in this article is considered accurate as of the publish date.
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