I have a little bit of a different situation - prepaid cards. We have several that have been closed for years and management identified that inactivity fees were not collected as disclosed prior to the cards being closed. They now want to collect those fees, thereby essentially taking the majority of the cards to zero and avoiding the work of escheatment. I know I have read somewhere that fees cannot be collected from a closed card but for the life of me I cannot find the reference now - did I imagine it?

Any help pointing me in the right direction would be GREATLY appreciated!

I'm confused. If these cards still have balances on them, how are they closed?

Once you terminate your card agreement by closing an account, you also terminate your ability to assess fees under that agreement.

Limitations on charging fees for escheatment would be subject to state law and you would need to ask legal counsel familiar with the laws of the states in which the cardholders' reside.

Some are "closed without refund" due to fraud, others are simply closed and no one came looking for the funds. I am still trying to work through how our processor did not issue checks immediately when the cards were closed. Prepaid is a bit of a different animal for me as I have never dealt with it in my career prior to this position so still working through many what-the-heck items that are coming to light in a massive clean up.

Escheatment is a state law issue, that being said: The FI owed money to the customer and did not pay it to them at close-out. Now they want to sidestep state escheatment laws and collect fees on funds belonging to customers?

This should be a question for your Risk management and then legal.

I would not want to be the FI noted for this in the local newspapers.