ALEXANDRIA, Va. — NCUA issued a legal opinion letter (06-1214) preempting Virginia's Division of Unclaimed Property challenge to a federal credit union's dividend and fee practices regarding inactive accounts.
"NCUA's longstanding position is that a state law, which attempts to govern an FCU's imposition of account fees and charges, including inactive or dormant accounts, directly conflicts with ?107(6) of the Federal Credit Union Act (FCUA) and ?701.35 of NCUA regulations and is preempted by federal law," the letter read. NCUA noted that it had preempted an earlier version of this same law that was similar.
Additionally, the letter explained, "The FCUA grants FCUs exclusive authority to determine terms, rates and conditions for member share accounts except as limited by the NCUA Board. NCUA regulations state:
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A federal credit union may, consistent with this section, parts 707 and 740 of this subchapter, other federal law, and its contractual obligations, determine the types of fees or charges and other matters affecting the opening, maintaining and closing of a share, share draft or share certificate account. State laws regulating such activities are not applicable to federal credit unions."
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