7 ms·

This is a practice that occurs elsewhere in U.S. fintech as well. A bank account can become dormant if there are no deposits or withdrawals over a specified per

by bicx 4y ago

This is a practice that occurs elsewhere in U.S. fintech as well. A bank account can become dormant if there are no deposits or withdrawals over a specified period of time as determined by the governing state. For California, it's 5 years, but for other states, it can be as soon as 12 months. Once an account becomes dormant, the holding bank is required to send the funds to the state through an escheatment process. Those funds are then listed as unclaimed property. PayPal is not a bank, but but rather operates banking services performed through Synchrony Bank. PayPal manages individual accounts within Synchrony, and it performs required communications and actions on behalf of Synchrony bank. In the U.S., the bank is ultimately responsible for servicing these accounts, but a partner like PayPal can take on that responsibility with the bank's oversight. Some more info for the curious: investopedia.com/terms/d/dormant-account.asp Rather than perform this (potentially expensive and arduous) process of handing dormant funds over to the governing state, companies like PayPal opt to just slowly absorb dormant accounts. It's scummy and I hate it. I assume this transfer of funds also keeps the account from being legally considered dormant (since funds did move).

ezfe 4y ago
I have an account with a local bank so I can use their branch services as needed. I keep the balance high enough to earn 1¢ of interest every month, and I set up an automatic system with my main bank to transfer that 1¢ to me. Avoids the dormancy fee!
fbdab103 4y ago
Planet Money did an episode about Escheat: https://www.npr.org/2020/01/24/799345159/episode-967-escheat-show https://www.npr.org/2020/01/24/799345159/episode-967-escheat...
diebeforei485 4y ago
$10 is too much to charge for this. If it was $1, that would be a lot more tolerable.
- deleted 4y ago
  [deleted]
- retSava 4y ago
  A: Sir, I have an idea that will earn us sooo much money! Just charge a one-dollar inactivity fee on accounts! Sir: That's a great idea! But I have a better idea that will generate ten times as much money - charge 10 dollars instead! I'm a genius. claims the idea, thinks about the promotion
sbf501 4y ago
> U.S. fintech Minor nit, but I don't think we need a neologism for 1,000 year-old institutions.
- corobo 4y ago
  Do you mean fintech? Might be 20 years late to put the brakes on that one.
  - sbf501 4y ago
    I know HN hates the NYT, but you are right! https://www.nytimes.com/2016/04/07/business/dealbook/the-evolution-of-fintech.html https://www.nytimes.com/2016/04/07/business/dealbook/the-evo... I thought it was just a flash new term cryptobros use to sound smrt.
Symbiote 4y ago
$10 is maybe a bit much, but I think the principal is fine. Last year, I received emails from a bank I used 10 years ago, asking me to contact them. It turned out they'd been writing to an old address. I thought I'd closed the account, but it had £0.75 in it. The bank spent much more than that trying to contact me, and I wasted far more time than it was worth closing the account. (They were used to the problem, I asked them to donate the money to charity.)
- Gasp0de 4y ago
  I assume the situation is this: They have loads of dormant accounts that haven't been used in years but that have a few dollars on them. If they want to close these accounts, they have to find those people and give them their $7.59. By having a $10 fee, they can empty those accounts within a few years and then just close them without investigating anything. This would take significantly longer with a smaller amount.
Fnoord 4y ago
> PayPal is not a bank Last time I checked they sure as hell have a banking license and operate in Luxembourg. Wikipedia says: "Since July 2007, PayPal has operated across the European Union as a Luxembourg-based bank." [1] I suppose they're not a bank in USA, but the world (and HN readership) is bigger than USA (also bigger than where I'm from; EU). [1] https://en.wikipedia.org/wiki/PayPal https://en.wikipedia.org/wiki/PayPal

by bicx 4y ago

ezfe 4y ago

I have an account with a local bank so I can use their branch services as needed. I keep the balance high enough to earn 1¢ of interest every month, and I set up an automatic system with my main bank to transfer that 1¢ to me. Avoids the dormancy fee!

fbdab103 4y ago

Planet Money did an episode about Escheat: https://www.npr.org/2020/01/24/799345159/episode-967-escheat-show https://www.npr.org/2020/01/24/799345159/episode-967-escheat...

diebeforei485 4y ago

$10 is too much to charge for this. If it was $1, that would be a lot more tolerable.

deleted 4y ago
[deleted]
retSava 4y ago
A: Sir, I have an idea that will earn us sooo much money! Just charge a one-dollar inactivity fee on accounts! Sir: That's a great idea! But I have a better idea that will generate ten times as much money - charge 10 dollars instead! I'm a genius. claims the idea, thinks about the promotion

sbf501 4y ago

> U.S. fintech Minor nit, but I don't think we need a neologism for 1,000 year-old institutions.

corobo 4y ago
Do you mean fintech? Might be 20 years late to put the brakes on that one.
- sbf501 4y ago
  I know HN hates the NYT, but you are right! https://www.nytimes.com/2016/04/07/business/dealbook/the-evolution-of-fintech.html https://www.nytimes.com/2016/04/07/business/dealbook/the-evo... I thought it was just a flash new term cryptobros use to sound smrt.

Symbiote 4y ago

$10 is maybe a bit much, but I think the principal is fine. Last year, I received emails from a bank I used 10 years ago, asking me to contact them. It turned out they'd been writing to an old address. I thought I'd closed the account, but it had £0.75 in it. The bank spent much more than that trying to contact me, and I wasted far more time than it was worth closing the account. (They were used to the problem, I asked them to donate the money to charity.)

Gasp0de 4y ago
I assume the situation is this: They have loads of dormant accounts that haven't been used in years but that have a few dollars on them. If they want to close these accounts, they have to find those people and give them their $7.59. By having a $10 fee, they can empty those accounts within a few years and then just close them without investigating anything. This would take significantly longer with a smaller amount.

Fnoord 4y ago

> PayPal is not a bank Last time I checked they sure as hell have a banking license and operate in Luxembourg. Wikipedia says: "Since July 2007, PayPal has operated across the European Union as a Luxembourg-based bank." [1] I suppose they're not a bank in USA, but the world (and HN readership) is bigger than USA (also bigger than where I'm from; EU). [1] https://en.wikipedia.org/wiki/PayPal https://en.wikipedia.org/wiki/PayPal