Dormant Accounts Dispute Comes to Life

RICHMOND, Va. – Members at as many as a dozen Virginia credit unions stand to gain thousand of dollars in inactive account fees and back-interest if an NCUA ruling on federal preemption is allowed to stand. The Virginia Treasury Department is reviewing the NCUA ruling, a legal opinion that states federally chartered credit unions need not comply with state laws on dormant accounts, as long as they comply with federal rules. Christopher Anuswith, president of Guardian FCU, said his and more than a dozen other credit unions have been notified by the state that their practice of waiving dormant account fees and/or paying back-interest on reactivated dormant accounts violates the state’s laws on escheat, which requires that accounts be declared dormant after a year of inaction and be turned over to the state after five years. “We’re a military credit union, so our guys are somewhat mobile and they change addresses a lot,” said Anuswith, whose membership is based around the Coast Guard. But state officials cried foul at the Portsmouth-based credit union’s practice of waiving the dormant account fee, a figure in excess of $75,000 over a ten-year period. Numerous other credit unions were also cited by the state, one with a dispute ‘over six figures,’ according to Anuswith. “We’ve always tried to reunite the members with their money,” he told The Credit Union Journal yesterday. “If we can reunite the members with their money and refund the fees, then what’s the foul?” Reginald Jones, a Richmond lawyer representing the Virginia CU League in the dispute, said if the NCUA legal ruling is allowed to stand it will raise another dispute on the issue of parity, because Virginia’s 40 state chartered credit unions would still be bound by the state law. “If it’s going to be a preemption for federal charters then we have to get the same deal for state charters,” he said.