From: Karen L. Suter, Commissioner
Subject: Charges Relating to Apparent Abandonment of Owner’s FundsThis Bulletin is in response to recent inquiries made to the Department of Banking and Insurance (the "Department") regarding the above-referenced subject. The law generally governing the abandonment of funds in this State is The Uniform Unclaimed Property Act, N.J.S.A. 46:30B-1 et seq. (the "Act"). The State Treasurer is the administrator of the Act and is charged with its enforcement, pursuant to N.J.S.A. 46:30B-97. However, compliance with those provisions of the Act applicable to banks and savings and loan associations is a matter of regulatory concern to the Department.
The following provisions of the Act specifically address charges related to apparently abandoned or dormant funds:
A holder may not deduct from the amount of a travelers check or money order any charge imposed by reason of the failure to present the instrument for payment unless there is a valid and enforceable written contract between the issuer and the owner of the instrument pursuant to which the issuer may impose a charge and the issuer regularly imposes the charges and does not regularly reverse or otherwise cancel them.
A holder may not deduct from the amount of any instrument subject to R.S. 46:30B-16 [including, but not limited to, checks and drafts] any charge imposed by reason of the failure to present the instrument for payment unless there is a valid and enforceable written contract between the holder and the owner of the instrument pursuant to which the holder may impose a charge, and the holder regularly imposes the charges and does not regularly reverse or otherwise cancel them.
A holder may not impose with respect to property described in R.S. 46:30B-18 [including, but not limited to, bank deposits, interest, and dividends] any charge due to dormancy or inactivity or cease payment of interest unless:
(a) There is an enforceable written contract between the holder and the owner of the property pursuant to which the holder may impose a charge or cease payment of interest;
(b) For property in excess of $2.00, the holder, no more than three months before the initial imposition of those charges or cessation of interest, has given written notice to the owner of the amount of those charges at the last known business address of the owner stating that those charges will be imposed or that interest will cease, but the notice provided in this subsection need not be given with respect to charges imposed or interest ceased before the effective date of this chapter [April 14, 1989]; and
(c) The holder regularly imposes the charges or ceases payment of interest and does not regularly reverse or otherwise cancel them or retroactively credit interest with respect to the property.
In addition, banks and savings and loan associations should note that the time periods applicable to any finding of inactivity or dormancy, and to the presumption of abandonment of property, are not affected by the subsequent merger or acquisition of the original issuer or holder of the property.
The Department requires banks and savings and loan associations to comply with the letter and spirit of these provisions, especially with regard to the clarity of any notice of charges provided to the owner of record of the property and the reasonableness of any charges imposed pursuant to the Act.
3/20/2001 /s/ Karen L. Suter