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News Now

CU System
Virginia governor signs CU parity law on dormant accounts
RICHMOND, Va. (4/2/08)--A Virginia bill that provides state-chartered credit unions with the same flexibility regarding inactive or dormant accounts fees and interest that federal credit unions exercise was approved by the governor. Senate Bill 136 was approved March 11 by Virginia Gov. Tim Kaine. The Virginia Credit Union League (VCUL) initiated legislation in the state’s 2008 General Assembly session to obtain parity for state charters on the issue of refunding dormant, or inactive, account fees. “We are very pleased with the new ruling and that our lawmakers believe this is something that state-chartered credit unions were supposed to have,” Alda Wilkinson, VCUL senior vice president, governmental affairs and public relations, told News Now. If a credit union or bank in Virginia loses contact with a member or accountholder after five years, the inactive account must be turned over to the state’s unclaimed property division. If the member turns up during those five years, and the credit union has charged dormant account fees, it may wish to refund those fees. The state unclaimed property division, in the course of its reviews or audits of credit unions, has maintained that a credit union may not refund fees on one account and not on all others. Where a credit union has already refunded fees to members who showed up, the unclaimed property division has claimed similar refunds for other similar accounts, the league said. Chris Anuswith, CEO of federally chartered Guardian FCU, Portsmouth, Va., obtained legal counsel and pursued this issue with the National Credit Union Administration (NCUA). NCUA ruled that federal law pre-empts state law on this issue, and that federal credit unions have the authority to refund fees as they choose. To obtain parity for state charters, the league recruited sponsors of identical legislation in both the House and the Senate (House Bill 1313 and Senate Bill 137). Both bills passed through the appropriate House and Senate committees, as well as on the floor of each house, with no dissenting votes. The governor has signed both into law, with an effective date of July 1. Virginia lawmakers recognized this as consumer friendly legislation and fully supported awarding all credit unions the opportunity to refund dormant and inactive account fees to members who are located or who turn up within the five-year holding period before dormant accounts are turned over to the state, said the league.


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