Box Relocations Provoke Lawsuits
by David McGuinn, BOL GuruGuru Bios
After 35 years of providing worldwide safe deposit training, products and consulting, I am frequently asked, "What's 'New' in the safe deposit industry?"
Lately, my answer is always the same. "Lawsuits! Due to mergers, downsizing, branch closures and relocations of many facilities, there have been numerous safe deposit lawsuits filed nationwide."
Incorrect Procedures
These lawsuits have occurred because many of these financial institutions did not follow correct box relocation procedures. Because of this lack of concern and knowledge, many unhappy consumers are taking legal action. For instance, the following examples show why these problems and the subsequent litigations now exist.
No Notification
One disgruntled box renter charged that, without any written notification mailed to him, his safe deposit box was drilled. Not only his, but he learned that two locksmiths spent the entire weekend inside the vault drilling boxes. In preparation for relocating the boxes, these men were given the security alarm code, and the vault door combination. They then went to work and successfully drilled over 80 safe deposit boxes with no dual control or management supervision. Many of these boxes contained valuable contents. These drilled boxes were never inventoried and only one employee transported these box contents to another location.
No One Knows Where
Another very unhappy family went to their financial institution to pick up their prized possessions - Fifty thousand dollars worth of antique gold and diamond jewelry that the family and their ancestors had accumulated over the past 100 years and wore only on special occasions.
The vault employee informed them that their safe deposit box had been relocated and they no longer had a box at this location. When the family asked where their box and contents were now located, the employee told them, "I don't know!"
The family attempted to complain to upper management. They were ignored and no one would discuss any details about their missing possessions. A significant lawsuit has been filed and the family is now awaiting a jury trial to help them recover their losses and legal fees.
Guidelines Needed
These are only two of the many horror stories that I have heard recently. Unfortunately, very few state and federal regulations spell out how to properly relocate or close a safe deposit facility. Because guidelines and assistance are always needed, many financial institutions are trying to establish their own internal procedures. When you attempt to create this step-by-step process you must also take into consideration and include the nationally accepted box relocation standards.
Whenever you close, merge or relocate your safe deposit operation your procedures must protect your financial institution and your box renter's contents. If a box relocation project becomes your responsibility, you should take every precaution that your security, insurance, vault design, legal notification, chain of custody log, project bidding and box relocation procedures are handled with utmost care.
12 Steps Necessary
Take into consideration the following 12 steps, which should be carefully adhered to when relocating:
- Notify all box renters properly. Send out letters well in advance of the move, giving your box holders time to come in and empty the box should they wish to do so. If there is returned mail, follow up quickly.
- Establish a specific "Chain of Custody" log. This is not a one-person job. Dual control during all of the process is necessary.
- Carefully select the right moving date and time. A holiday weekend with the branch on the parade route is not a good idea. Nor is it advisable to move during rush hour. Choose your time carefully.
- Identify the safest access routes, to and from each location. Dry run the route, repeatedly, and especially during the time of day you have decided on.
- Establish adequate security controls and procedures. If you are in a heavily populated area, you may need to hire security personnel to supervise the move. In any area, you must have the box contents secure at all times.
- Review your safe deposit liability insurance coverage. There may be clauses in your coverage that mandate specific safeguards. Unless you adhere to these requirements, you may not be covered by insurance during the move.
- Prepare a detailed vault floor plan and box layout. You and your partner (dual control) should be totally familiar with the new layout so there are no 'glitches' when you arrive at the new location.
- Develop a written box move bid specification. The more detail, the better.
- Establish a detailed box relocation bidding procedure.
- Use only "experienced" box movers. If possible, hire those who have done the job before. If you can't find experienced box movers, you'll have to train them yourself, and oversee the procedure much more closely.
- Specify your box relocation requirements. In writing - before you sign the contract.
- Review all dimensions, procedures, specifications, etc. Again - work with your partner to make sure you have not overlooked some important detail.
Buy a Dozen Eggs
In addition to these steps, one innovative financial institution came up with a great idea. They bought a dozen eggs just before their box move. They placed a hard-boiled egg in twelve empty boxes that were scheduled to be moved. After completing the relocation, these uncracked eggs were removed under dual control and this entire procedure was documented. This extra precaution would serve as a valuable defense if any renter makes a claim for damaged box contents in the future.
You Can't Be Too Careful
Any precautions you can take to minimize your unlimited liability should be seriously considered and implemented. Remember, your safe deposit operation is the only consumer service you provide in which you cannot define, anticipate or limit your potential legal exposure.
About the Author: David P. McGuinn, President of Safe Deposit Specialists, is a former banker and is often referred to nationwide as the safe deposit GURU. In all 50 states he has trained over 150,000 safe deposit managers and created numerous safe deposit manuals, training videos, and compliance products, including a "Box Relocation Manual". McGuinn's safe deposit products are recognized as the national standard for the financial industry. He is a resident expert on BankersOnline.com and a frequent contributor to the BANKERS' HOTLINE. Re: the article above: If you need to develop your own internal procedures and would like additional box relocation information, call (713) 937-9929 or email your request to sdspec@aol.com.
Copyright © 2004 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 14, No. 07, 10/04
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