Member relationships are the lifeblood of your business. But the unfortunate reality for credit unions is that you face the possibility of “silently” losing member accounts through the escheatment of dormant and lost accounts each year.
The proper management of unclaimed property is an often-overlooked yet effective avenue for member retention. By fundamentally understanding unclaimed property and best practices for reactivating dormant accounts prior to escheatment, you can preserve your member base--and your bottom line.
What is unclaimed property?
Unclaimed property is any financial obligation that is due and owing to another party. While there are more than 100 types of unclaimed property, the most common items relative to credit unions include:
Credit unions are legally required to perform due diligence prior to escheatment. If unsuccessful, you're required to report and remit the member’s assets to the state of the member’s last known residence once the “dormancy period” has expired.
Dormancy periods — the length of time an account owner can be inactive before their account is considered reportable — range from three to five years, depending on the type of property and state laws. With unique provisions for each state and other reporting jurisdictions (including the District of Columbia, Puerto Rico, the U.S. Virgin Islands, the Mariana Islands, and Guam), reporting correctly, let alone proactively preventing escheatment, can be challenging.
Best practices for preventing escheatment
The following best practices can help you effectively and efficiently locate and communicate with dormant members, enabling you to reactivate and retain customer accounts.
Whether you handle the management of unclaimed property in-house or outsource it — a growing trend given the complexities of compliance — safeguarding your members’ assets can help you protect these relationships and positively impact your revenue.
MICHAEL J. RYAN is senior vice president with Keane, which specializes in unclaimed property communications, compliance, and consulting.