Can the bank really send my grandmother's savings to the state for inactivity?
August 30, 2012 8:47 AM   Subscribe

My grandmother just received a notice from her bank that if she didn't act soon, her bank account would be closed for inactivity and the money given to the state. Is this real, or a misinterpretation? Is it legal? If so, what can she do to stop this and also avoid it in the future?

My grandmother is an older person and has a lot of depression-era habits. She maintains multiple savings accounts in different banks, all for different contingencies or needs. Because of this, she doesn't often deposit in them or pull the money out, sometimes for years.

I can understand banks wanting to close her account for inactivity, because they don't make as much money with someone just letting a savings account sit there, but wouldn't they send her a check at least for the money in the account? Where is this "the money will go to the state" coming from?

I haven't seen any of this correspondence, so some of it might be inflated by fear of the state confiscating money and property, which we have a family history of in the old country. I want to know exactly what's going on and what the limitations of the laws are, so I can either reassure her, or help her handle this.
posted by corb to Law & Government (25 answers total) 3 users marked this as a favorite
Sounds like a scam.
posted by lohmannn at 8:48 AM on August 30, 2012 [1 favorite]

Call the bank on her behalf and find out what the deal is.

Sounds like a scam to me too.

Call the bank's published customer service line, not a number listed on the letter.
posted by Ruthless Bunny at 8:52 AM on August 30, 2012 [5 favorites]

Banks absolutely can, and do, do this. It's worth a call or visit to the bank to confirm, but you may be able to reset the "inactivity" clock simply by depositing or withdrawing a small amount of money.
posted by spacewrench at 8:52 AM on August 30, 2012 [11 favorites]

It's true that banks do this, but I think they give it to the state so that the state can hold it as "unclaimed property" that you can then claim from the state. So -- as far as I know, the state doesn't actually just take the money.
posted by rabbitrabbit at 8:53 AM on August 30, 2012 [8 favorites]

It can happen, but shouldn't happen unless they're getting returned mail. This is usually called "escheatment." If the letter doesn't mention that, it could easily be a scam but I'd do exactly what Ruthless Bunny says.
posted by powpow at 8:54 AM on August 30, 2012

Sounds legit to me depending on how long the account has been inactive. I suspect if she were to just call the bank and say she is still a valued customer the clock would reset and she wouldn't get another letter for several more years. If that's not enough just deposit $1.

I suspect this is for situations where an account has been inactive for a long time and the bank suspects it has been forgotten. Part of the process is probably letters like this alerting the customer. If they get no response then they the money goes to the state unclaimed property fund...where it can probably be claimed for several more years.

if they have no contact from the customer and no response to the letters, then sending a check for the account balance wouldn't make sense from the banks perspective...
posted by NoDef at 8:55 AM on August 30, 2012

I got a similar letter for an account I created and just left alone for a few years. All I did was do a $5 withdrawal to bring the account active again.

(As for "the money going to the state", they probably mean that it would go to the Unclaimed Funds Office for your state. If your grandmother were to ignore the letter they sent, the bank would assume that she no longer lives there, and would not want to send a check to that address.)
posted by Lucinda at 8:55 AM on August 30, 2012 [3 favorites]

Yes, they can do this. It's not really the bank, it's the state. It's recoverable, as well. They do this when they think that the person is no longer living.
posted by sm1tten at 8:56 AM on August 30, 2012

The money would go to the state agency that deals with unclaimed accounts (in our state it's the state land department.) the money doesn't go into the general fund though. Her state probably has s website where you can search for unclaimed accounts. You might want to check and she if she has other accounts that have been sent to the state.
posted by vespabelle at 8:57 AM on August 30, 2012

Probably not a scam. They're worried about "unclaimed property" regulations. All of the states have entities set up to deal with this sort of thing, and most let you search their holdings. For all the bank knows, your grandmother is dead, and the estate just hasn't found the accounts. This is quite common, particularly with elderly people with "Depression-era habits," who may well have monies scattered to the four winds that they've never told anyone about. The bank is more than happy to sit on her money, but it's probably getting understandably nervous that it's sitting on no one's, which is logistically problematic.

Even if the money is turned over to the unclaimed property bureau, you can get your stuff pretty easily. I just had my dad claim about a thousand bucks from a weird employer-sponsored insurance benefit that had expired like ten years ago that he and everyone else had forgotten about entirely.

because they don't make as much money with someone just letting a savings account sit there

Not true. If anything, they make more money on inactive accounts than active ones, because active accounts require more oversight. They're more worried that she's just forgotten about the money entirely or that it's somehow gotten lost in the shuffle.

She should be able to give them a call to clear things up.
posted by valkyryn at 8:59 AM on August 30, 2012 [4 favorites]

Yes, banks and credit unions do this. It's called escheat. The financial institution will usually charge an escheat fee before turning over the contents of the account to the state.

I don't know if they follow the same procedure for contents of safe deposit boxes.
posted by infinitewindow at 9:04 AM on August 30, 2012

My god, as always, AskMeFi to the rescue. I just did this and found out this has already happened with multiple other bank accounts as far back as 1993.

A followup question: can this (and the claiming of her apparently unclaimed accounts) mostly be done from home/online? She's got mobility issues, and it is very difficult for her to leave her home.
posted by corb at 9:05 AM on August 30, 2012 [1 favorite]

When I unclaimed property (in State of WV), I needed to go to a bank (there might be someone you can pay to come to her house) to get something called a Signature guarantee, which is sort of like a notarized form on steroids. It was free since I had a account with the bank.

However, I was able to mail in the request. State sites should have more information.
posted by sandmanwv at 9:12 AM on August 30, 2012

Your state should have an unclaimed property division (for example, California's is here)

I would imagine that the process varies from state to state, but when I had to file an unclaimed funds claim, I was able to do everything by mail. If your state requires a notarized signature, it's fairly common for notaries to make housecalls.
posted by zombiedance at 9:15 AM on August 30, 2012

A signature guarantee needs to come from a bank - and probably is most easily obtained at a bank where you have had an account for some time. As I understand it, it carries some degree of financial liability for the issuing bank if fraud takes place and goes well beyond just ensuring a person's identity.
posted by NoDef at 9:20 AM on August 30, 2012

I don't know if they follow the same procedure for contents of safe deposit boxes.

There's a similar process for safe deposit boxes, though it varies from state to state (some states hold the physical contents, some will sell the contents, but you still have the right to the money.)

In Massachusetts, at least, the money DOES go into the state general fund, but you still have the right to have it back with interest.
posted by endless_forms at 9:21 AM on August 30, 2012

What sandmanwv said. When I had to assist, the signature guarantee had to come from the bank; but we had to physically driver her there (granted, this was in the 1990s after all those SnL scandals and closures, so the physical records were pretty mixed up.

If the local bank she has an account with can do this (find out if you need separate copies for each), it might be only one trip ...
posted by tilde at 9:23 AM on August 30, 2012

A followup question: can this (and the claiming of her apparently unclaimed accounts) mostly be done from home/online? She's got mobility issues, and it is very difficult for her to leave her home.

It will depend on the bank, but if there is such a thing as a "traveling notary" in her area, it may be possible for that person to come to her house and notarize her signatures.

I would be concerned about other important mail your grandmother may not have been opening, or perhaps not receiving; it is usually the case that banks send several notices about account inactivity.
posted by Sidhedevil at 9:23 AM on August 30, 2012 [3 favorites]

can this (and the claiming of her apparently unclaimed accounts) mostly be done from home/online?

If they're still with the bank, that will depend on how they want to play that. You'll have to call and ask.

If they've been sent off to the state, it's entirely possible, but you'll have to check with your state's unclaimed property division. A lot of states have the process entirely online. Some have forms you can print out and mail. Some will let you search but require you to go into some office somewhere to submit your claim. All just depends.
posted by valkyryn at 9:33 AM on August 30, 2012

Depending on where you are you may also KNOW a notary in the neighborhood who can come by and affirm her signature (assuming the documents can be submitted by mail, etc). Or maybe it's worth paying the $50 or so to become one yourself so you can notarize her documents. So long as you do not have a fiduciary interest or are one of the signatures being notarized there's probably no conflict with doing so for her. Or at least there wasn't when I was in Florida a decade ago; I notarized things for family from time to time.
posted by phearlez at 9:34 AM on August 30, 2012

My mom claimed some unclaimed funds from the state of New York last year and she was able to do the whole thing through the mail/online. They did charge her a small fee for the paperwork (I think it was something like $30) but she ended up getting much more than that back so it was worth it.
posted by katyggls at 9:35 AM on August 30, 2012

It's totally the season for escheatment notices to go out from banks. I work for a bank and have seen this first hand in our Abandoned Property operations area. Different states have different rules around this, but basically an account that appears to be "dormant" for a certain period of time is subject to escheatment to the state. Banks can all define "dormant" differently, too.

For my bank, if you show up on our LIST, we spend a fair amount of time trying to reach you by phone before you get this letter from us. If we reach you over the phone, we verify you own the account, and can register our conversation with you as contact or "activity", which pulls you off the list. The challenge is that a lot of customers who get these phone calls DO think it's a scam and it becomes a difficult conversation to convince them that the Bank is really THE BANK and not a crook (I did work with our AP team to improve scripting to make it a better customer experience).

If we can't confirm who you are over the phone by August, your name goes with the other names still on the LIST to a mail house that prepares/sends letters like the one you mention. Again, folks who get these letters think SCAM or THEY WANT TO SELL ME SOMETHING, so the letters get ignored - we try VERY hard to keep your name off the letter list, because once it's come to that, I can almost guarantee that your money will go to the state in October.

I sat with a lot of Ops folks making these phone calls, and the people on the LIST tend to be a lot like your grandmother - older folks who park money in several banks and let it sit. NOTHING at all is wrong with that, but we are required by the state to do what's described above. You should see the cluster fuck that spins up when you've abandoned REAL property in a safe deposit box.
posted by ersatzkat at 10:07 AM on August 30, 2012 [4 favorites]

I am a creditor's rights lawyer for a major bank. (but not yours or your grandmother's!)

As you have seen, this type of notice is legitimate if it is from the bank. In fact, it may be required by statute. If an account has no activity for a period of time, usually several years, the account is deemed to be abandoned property and escheated to the state. I recently had a case where a customer tried to sanction the bank for doing so, despite the statutory requirement and the notices sent to the customer. Generally, a simple phone call to the branch is sufficient to reset the clock.

HOWEVER, regarding funds that have already been escheated, please make sure that this notice can from the bank itself and not some third-party. There are companies out there who will send these notices to bank customers offering to "help" them recover escheated funds from the state for a fee. This is a scam. Any citizen can reclaim escheated property from the state, so far as I have ever heard of, without having to pay any sort of fee to the state.

Depending on your state, your grandmother should be able to do it all from home. Most states have a website where a citizen can input their name and social security number and discover if the state is holding their property. Then it is generally a matter of printing up the form, signing it before a notary, enclosing a copy of ID, and mailing it to the state.

I can see how this might be a bit mystifying, but this is a pretty easy thing to work out.
posted by Tanizaki at 10:52 AM on August 30, 2012 [1 favorite]

If you end up going to the bank to get a signature of guarantee call ahead to make sure that The Person who can do that is there and to see if you can get a prearranged appointment with them. It might only be available at some branches or on some days, but if you have that appointment then you can just walk right in and get it taken care of immediately. (This is doubly true if you ever need a medallion signature of guarantee.)
posted by anaelith at 11:47 AM on August 30, 2012

Thanks, everyone! I managed to help her reclaim her funds, and explained to her why she should call the banks more and have contact with them. She's been recovering her funds, which has been great! Appreciation to all MeFite assistance on this one.
posted by corb at 5:22 AM on October 1, 2012 [1 favorite]

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