Skip to content
BOL Conferences Top Gun 23
Learn More - Click Here!

Thread Options
#304869 - 01/18/05 06:55 PM Fees on "Free" Checking
Snowgirl Offline
Platinum Poster
Joined: Sep 2003
Posts: 714
We currently offer a Free checking account that has no fees. Many of these accounts then sit for months on end with $5.00 or less in them. We would like a way to get these accounts off our books and to not have to send monthly statements. We would like to disclose to the customer that after 90 days of inactivity and a balance of under $25.00 the account will be transferred to a regular checking account with monthly services charges. Is there any problems with this or with sending a change in terms to existing customers disclosing this change? Thanks for any help!

Return to Top
Operations Compliance
#304870 - 01/18/05 09:42 PM Re: Fees on "Free" Checking
Anonymous
Unregistered

Any takers on this thread?

Return to Top
#304871 - 01/18/05 10:17 PM Re: Fees on "Free" Checking
Anonymous
Unregistered

Provided you give them the proper advance notification, there is nothing wrong with doing this.

Return to Top
#304872 - 01/18/05 10:58 PM Re: Fees on "Free" Checking
OkieOps Offline
Platinum Poster
OkieOps
Joined: May 2001
Posts: 752
OK
We started charging a Dormant Fee on account with less than $50. That got rid of a lot of them.

Return to Top
#304873 - 01/18/05 11:15 PM Re: Fees on "Free" Checking
Snowgirl Offline
Platinum Poster
Joined: Sep 2003
Posts: 714
Thanks for the info. How did you charge a dormant fee without following your State guidelines for dormant accounts? Our states procedures for dormant accounts would not allow you to be charging within 90 days.

Return to Top
#304874 - 01/19/05 01:49 AM Re: Fees on "Free" Checking
Banker Boy Offline
Member
Banker Boy
Joined: Oct 2003
Posts: 69
Florida
After 90 days, we change the account type to another type of checking that has a monthly fee for low balances. This is in our disclosures and is also told to the person when they're opening the account.

Return to Top
#304875 - 01/19/05 07:25 PM Re: Fees on "Free" Checking
OkieOps Offline
Platinum Poster
OkieOps
Joined: May 2001
Posts: 752
OK
Quote:

Thanks for the info. How did you charge a dormant fee without following your State guidelines for dormant accounts? Our states procedures for dormant accounts would not allow you to be charging within 90 days.




We don't start charging that fast. On our system, an account is not Dormant until 2 years of inactivity. Keep in mind, we went for years without the Dormant Fee and kept sending statements for accounts with $0.78 in them. So we got rid of a lot of old accounts when we started charging. Another way we have found to get rid of them is when they come in to cash a check against their $4.89 account. We refuse and make them deposit. This causes some people to go ahead and close the account. Mission accomplished.
Last edited by NancyC; 01/19/05 09:57 PM.
Return to Top
#304876 - 01/19/05 08:14 PM Re: Fees on "Free" Checking
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 80,325
Galveston, TX
If you charge these accounts and there is money left at the time of escheatment in Oklahoma in have to report all the charges.

735:80-5-1
(c) If charges are deducted from property, a holder shall include or attach as a part of the report filed pursuant to the Uniform Unclaimed Property Act:
(1) The value or amount of each item or property before any charges are deducted therefrom;
(2) The amount of the charges deducted from each item and the date or dates on which such charges were deducted.
(3) Policy that the holder regularly imposes such charges and does not regularly reverse or otherwise cancel them.
(4) Such other information or documentation that substantiates the deduction of the charges.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#304877 - 01/22/05 05:33 PM Re: Fees on "Free" Checking
Anonymous
Unregistered

Our commerical department wants to offer a FREE Business Checking account. They think as long as they waive the monthly maint. fee, they can call it a free account. They want to charge a per item fee for items over 100. They also have a disclosure on the bottom the account will convert to another account type after 1 year. Does Fair and Deceptive not apply to commercial accounts? Please advise me. Thanks

Return to Top
#304878 - 01/22/05 06:47 PM Re: Fees on "Free" Checking
John Burnett Online
10K Club
John Burnett
Joined: Oct 2000
Posts: 39,859
Cape Cod
The Unfair (thanks, Andy!) and Deceptive rules typically apply to consumer accounts only (at least in most states). I know of several banks that offer free business accounts with activity charges that kick in at 100 or 200 items. Some include the count of deposited items in that "trip" of fees.

Generally, as long as you state the exceptions (even in the fine print), and do this only with business accounts, you should be OK.
Last edited by John Burnett; 01/24/05 04:02 PM.
_________________________
John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8

Return to Top
#304879 - 01/22/05 11:46 PM Re: Fees on "Free" Checking
Andy_Z Online
10K Club
Andy_Z
Joined: Oct 2000
Posts: 27,590
On the Net
FWIW, it is UNFair or Deceptive Acts or Practices. As far as Reg. AA is concerned I believe John is correct. And you should look at state laws.

I think many banks do this since business accounts do not get the same protections consumers do. But you should still make a clear and conspicuous disclosure to avoid surprises and claims later. If they know the terms going in and want the product, sell it.
_________________________
AndyZ CRCM
My opinions are not necessarily my employers.
R+R-R=R+R
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell

Return to Top
#304880 - 01/23/05 12:56 PM Re: Fees on "Free" Checking
Sisyphus Offline
100 Club
Sisyphus
Joined: Jun 2004
Posts: 214
Connecticut
IMHO, on the subject of "unfair or deceptive" practices, it might not be worth the "headline risk" to treat commercial customers differently than consumer customers, even if the law permits us to do so.

What would the bank's response be to the newspaper reporter: "That was a commercial customer--we can do what we want"? That might be "correct," but might not be the right thing to do.

The Bank's Risk and Legal areas should provide input. For FDIC guidance, click here.
_________________________
Michele A. Johnson, Compliance Manager Integrated Compliance Solutions, LLC

Return to Top
#304881 - 01/23/05 06:25 PM Re: Fees on "Free" Checking
Andy_Z Online
10K Club
Andy_Z
Joined: Oct 2000
Posts: 27,590
On the Net
I see no problem in treating them differently. In many cases it may act to their advantage. But I recommend doing it with complete and accurate disclosure.
_________________________
AndyZ CRCM
My opinions are not necessarily my employers.
R+R-R=R+R
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell

Return to Top
#304882 - 01/24/05 02:43 PM Re: Fees on "Free" Checking
Anonymous
Unregistered

Thanks for your responses! I tried to bring up the FDIC link, but got an error message. Could you link it again? Thanks

Return to Top
#304883 - 01/24/05 03:00 PM Re: Fees on "Free" Checking
Andy_Z Online
10K Club
Andy_Z
Joined: Oct 2000
Posts: 27,590
On the Net
_________________________
AndyZ CRCM
My opinions are not necessarily my employers.
R+R-R=R+R
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell

Return to Top

Moderator:  Andy_Z, John Burnett