ALEXANDRIA, Va. — NCUA issued a legal opinion letter statingthat the Federal Credit Union Act trumps Virginia law when it comesto a federal credit union's dividend and fee practices regardingdormant accounts.

|

NCUA legal opinion letter (06-1214) pre-empted Virginia'sDivision of Unclaimed Property objection to a federal credit unionretroactively waiving account fees or reinstates dividendspreviously unpaid because of an inactive status. “NCUA'slongstanding position is that a state law, which attempts to governan FCU's imposition of account fees and charges, including inactiveor dormant accounts, directly conflicts with ?107(6) of the FederalCredit Union Act (FCUA) and ?701.35 of NCUA regulations and ispreempted by federal law,” the letter read. NCUA noted that it hadpre-empted an earlier version of this same law.

|

Additionally, the letter explained, “The FCUA grants FCUsexclusive authority to determine terms, rates and conditions formember share accounts except as limited by the NCUA Board. NCUAregulations state:

|

A federal credit union may, consistent with this section, parts707 and 740 of this subchapter, other federal law, and itscontractual obligations, determine the types of fees or charges andother matters affecting the opening, maintaining and closing of ashare, share draft or share certificate account. State lawsregulating such activities are not applicable to federal creditunions.”

|

NCUA also pointed out that reversing account fees and payingassociated dividends keeps the money from going back to the state,but is more beneficial to the consumer.

Complete your profile to continue reading and get FREE access to CUTimes.com, part of your ALM digital membership.

  • Critical CUTimes.com information including comprehensive product and service provider listings via the Marketplace Directory, CU Careers, resources from industry leaders, webcasts, and breaking news, analysis and more with our informative Newsletters.
  • Exclusive discounts on ALM and CU Times events.
  • Access to other award-winning ALM websites including Law.com and GlobeSt.com.
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.