Have you checked your bank accounts lately?
According to Australia's Herald Sun, the Australian government seized a record $360 million from ‘dormant’ household bank accounts in 2013 alone. A rule change in 2012, allowed the government to seize the money in some 80,000 accounts that had been dormant for three years. Prior to the change, just $330 million had been collected between 1959 and 2012.
While you might be wondering why you should care about a banking regulation in Australia, it turns out the practice is somewhat common in the United States as well. On radio this morning, Joe Kerry, president of Mercury One, explained the fight his family is currently battling with the state of Pennsylvania over funds liquidated from one of their bank accounts without their knowledge.
As Joe explained, about six months ago his wife noticed that they had stopped receiving bank statements for one of their accounts. He proceeded to go back and look at old statements he had received and, sure enough, there was language that explained the state of Pennsylvania could liquidate the account if there is no activity in a certain period of time.
“She started going through the statements, and on one statement, which was full of language, one sentence in one paragraph of that statement said, ‘If you have no activity on this account, we will close out this account, based on Pennsylvania law blah, blah, blah,’” Joe explained. “What I don't understand is dividends were being paid into this account. We were paying taxes on this money the whole time, yet because there was no activity for a six month period, the state of Pennsylvania took that money, without any notice to us.”
Joe and his wife got in touch with their state senator because they were so baffled by the policy and how either the bank or the state did not have to contact them before withdrawing the money.
“We went to our state senator and said, ‘This can't be right. Our mailing address was accurate. The e-mail address was accurate. The phone number was right. How could this be inactive? Dividends are paid into the account,’” Joe said. “Well, under this new law, any account that you don't log into in a six month period, that money is transferred to the state.”
The state of Pennsylvania confirmed that the money was transferred out the account because it was considered “unclaimed property.” Remarkably, however, the state was unable to tell them how much money was seized.
“The state said, ‘Yes, the money was transferred.’ We said, ‘How much was taken?’ They said, ‘We won’t know for three to six months how much money we took from that account because our records aren't updated for that period of time,’” Joe explained. “We could go back to our own records. But the state didn't know. They take this money… [but] they could not tell us where that money was, how much was taken, and how we would get it back.”
As it turns out, there were several other families in Joe’s own neighborhood who had been affected by the law and not even realized it. Fortunately, as of about two weeks ago, the state of Pennsylvania began cutting check to those who had their accounts liquidated.
“This is such a dangerous thing. My grandparents lived through the Great Depression. My grandparents had two rules: I don't keep all our money in the bank because I don't trust the bank. Second rule: I don't go to the hospital because hospitals are where you go to die. I never understood that, until recently,” Glenn concluded. “My grandparents didn't trust the banks. They didn't trust the doctors. We are headed right back to that period.”
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