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I hadn't been paying attention to my checking account (in which I kept a minimum balance of $1500 just to avoid a monthly "maintenance fee") for about a year. But, yesterday I logged in and found that it had incurred a $5 "dormant fee" in each of the last 4 months. I newly learned that a checking account becomes "dormant" after 11 months without activity. This bank is in Washington state in USA.

I could have avoided the fees simply by moving $5 from my checking account into my savings account.

It frustrates me that they never even sent an email to me (before or after any of the fees).

Is this really legal in USA?

In court, I would argue that the bank actually benefits from my inactivity. Accounting is easier and, for a given total balance, they would actually prefer to have inactive customers for more stable loaning. They simply did not provide anything, or incur any extra difficulty, to justify a fee.

It is clear that they are taking advantage of fine print that no one ever reads, about a fee that the customer does not naturally expect. I consider this to be morally wrong, but wondering here if a class action lawsuit is likely to win or lose.

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    If you're sufficiently bothered, you're almost certainly better off submitting a complaint to the CFPB consumerfinance.gov/complaint if contacting the bank doesn't satisfy you. That's vastly less work than a lawsuit and banks have every incentive to make their regulator happy. Jan 27, 2021 at 20:44
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    They may have notified you in one of your monthly statements. Do you read all the text of your statements? I know I don't.
    – AndyB
    Jan 28, 2021 at 6:10
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    "fine print that no one ever reads" - fine print that a prudent, sensible person always reads. Jan 28, 2021 at 9:37
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    since the base rate in the US is currently almost zero (0.13%) a dormant bank account will be a net negative for many banks (because of cost for sending out monthly statements, customer support, etc.). So it could be hard to argue that the fee is unwarranted. - Many banks currently make a big portion of their earnings with transfer fees and similar, so they mostly earn money from active accounts. So the fee is not without a logical basis.
    – Falco
    Jan 28, 2021 at 12:02
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    @bobuhito "banks can't just write anything there." - no, but they can print anything that their lawyers have checked is legal. Jan 28, 2021 at 17:47

3 Answers 3

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The legal aspect is better suited for https://law.stackexchange.com, but It's probably "legal" because you signed an agreement when you opened the account that detailed the charge. They aren't "damages" that you can argue aren't appropriate, so they don't have to justify it.

However, you might get them to refund the fees if you threaten to move your money elsewhere. They may rather refund part of all of those fees to keep you as a customer. Or, they may not, if you aren't a big enough fish to worry about. In that case, you have a choice: stay with them and know that you have to keep a minimum balance (or rearrange your balances) or move to one of the dozens of "free" banks that exist without these types of fees (or at least fees that don't apply to you).

A lawsuit is going to cost you way more than the $20 you're out in fees.

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  • I did ask to refund the fees and they refused. I was thinking a class-action lawsuit might go pro-bono (maybe this isn't the right term, so let me say that the lawyers get paid by the bank as part of the penalty only in case we win), so I really don't have to pay anything but my time (and I even think my time could be compensated as part of legal fees, and even if not, it would be a good learning experience and a matter of principle).
    – bobuhito
    Jan 28, 2021 at 3:02
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You do realize that this information is more than likely in the Fee Schedule and Agreement for Deposit that is provided to you when you open your account, correct? And most, if not all, institutions will send a notice in the mail stating that your account is going to go dormant and will begin incurring the $5 fee. A class-action lawsuit is ridiculous because you failed to read your provided disclosures.

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  • Yes, I realize that. But, at what point, does fine print become a scam? I mean would you find this unreasonable if the fine print fee were $50?
    – bobuhito
    Oct 26, 2022 at 15:38
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    @bobuhito Difficult to call it a scam if it's written in an agreement you signed. Oct 26, 2022 at 19:06
  • If the fine print were $50 and I thought it might happen when I wasn't paying attention, Is consider banking elsewhere. You are expected to do due diligence and understand the basics of what you are agreeing to. And this is pretty basic
    – keshlam
    Oct 16, 2023 at 1:14
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I realize this is an old question, but I ran across it while doing research on inactivity and dormancy fees charged by banks and found it ironic! I’m researching for the exact opposite reason of your post, ha.

My institution does not currently charge these fees due to a long ago “recommendation” by our regulator. I’m researching how we may be able to implement a new fee without running into regulatory issues. After years of not charging inactivity fees, we’re left with tons of accounts with small balances that we have to work through the escheatment process. This process is labor intensive in and of itself, but the risk of fraud with inactive and dormant accounts is also high. Monitoring inactive and dormant accounts for new activity and then proving it was the customer who initiated this activity is a whole ordeal as well. These factors combined make it extremely beneficial for financial institutions to strongly discourage inactive and dormant accounts from remaining in that state for long.

Fees are a good way to zero out and close these small dollar accounts so they never become eligible for escheatment to the state and don’t remain vulnerable for fraud. They also encourage customers like you with larger balances to either begin using your account as a primary checking and become a “stickier” customer, or close out the account and move on. Either of those options is more desirable than maintaining your account for years and eventually having to jump through the notification hoops before sending all of your money to the state to end up on an unclaimed property database.

All that to say, in this case it’s probably not a matter of your bank being greedy and wanting something for nothing. An inactive account is actually a lot of work to maintain.

If anyone out there reads this far and is interested in sharing their opinion, what would be the best way for a bank to charge this type of fee and not anger you? Maybe a larger one time fee instead of monthly? A letter to warn you before the fee kicks in?

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  • Letter would certainly be courteous, and is what I've gotten from other banks. "This account has been inactive for mumble years. We can close it out for you, we can charge you a small fee to keep it open (as you agreed when you opened the account), or you can start using it again. Please let us know which you would prefer; if we can't reach you we'll either have to charge that fee or declare it an abandoned account and turn it over to the state (in which case you'd need to talk to them about getting the remaining money back). Thank you for doing business with us!"
    – keshlam
    Oct 13, 2023 at 14:53
  • In my case, I logged into my account at least every 2 months, but still got the fee. Isn't that enough for you to conclude that my account should not go to escheatment?
    – bobuhito
    Oct 13, 2023 at 16:54
  • For people that are not logging in (and not walking in), I do agree that you should motivate them with a fee to prove that they are still alive and aware of their account. The courteous bank would start this process with a letter and email stating, "You need to log in or come in, or else you will be charged a fee while we consider escheatment". Less-courteous banks could just write in the opening contract that this fee process begins automatically if, for example, "The customer does not log in or walk in or use their account in any way for a full calendar year".
    – bobuhito
    Oct 13, 2023 at 16:56
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    Hi Bob! That’s a great question/suggestion and I’m happy to hear you were monitoring your account regularly. You’re the kind of inactive customer I can appreciate :) As for whether that would be enough to keep an account from going inactive and eventually escheated, those rules aren’t made by us. Each state dictates how long an account can be dormant and what kind of activity will bring an account out of dormancy. Oct 13, 2023 at 23:27
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    As far as I know, logging into online banking isn’t a qualifying activity at this time. The rules around escheatment are so convoluted that most banks pay for services to keep track of all the different and ever changing rules and requirements for every state. Bottom line is state governments want your money even more than your bank, haha! Oct 13, 2023 at 23:28

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