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Regulatory Bulletin

Regulatory Bulletin  3.3-101: Guidelines for "18-65" Accounts

Table of Contents

1.0 Applicability and scope

The purpose of these guidelines is to provide banks with guidance on how to comply with the provisions of the "18-65 law" so called. This bulletin retains a question and answer format in order to provide practical information to institutions and individuals seeking information on certain aspects of the 18-65 law. Institutions with additional questions or concerns should refer to the entire statute for additional guidance on the law's scope.

A bank, as defined by G.L. c. 167D, s.1, is prohibited from imposing any fee, charge or other assessment against the savings account or demand deposit account of any persons sixty-five years of age or older or eighteen years of age or younger pursuant to G.L. c. 167D, s. 2, subparagraph 1. However, the Act specifically provides that a reasonable charge, as determined by the Division of Banks ("Division"), may be assessed against any such account of any such persons when payment has been refused because of insufficient funds or paid despite insufficient funds on any check or other action drawn on such account, as set forth in the Act.

Pursuant to the requirements of section 2 of chapter 167D, as rewritten, the Division has determined that, for any account covered by the law, the charge to be assessed for a transaction refused because of insufficient funds or paid despite insufficient funds shall not exceed $5.00 per such transaction.

Massachusetts General Laws chapter 167D, s. 2, subparagraph 1, as most recently amended by Chapter 234 of the Acts of 2010 ("Chapter 234"), sets forth, in part, that:

[A] natural person 18 years of age or under or 65 years of age or older may choose 1 demand deposit account and 1 savings account which, in each instance, shall include a joint account in which the spouse of the eligible depositor, regardless of age, is the joint tenant therein or the joint tenant would otherwise be an eligible depositor, and which has been established and used for personal, family or household purposes, upon which no service, maintenance or other similar charge shall be imposed. No such account shall be subject to: (i) a minimum balance requirement; (ii) a charge for a deposit or withdrawal; or (iii) a fee for the initial order or subsequent refills of the basic line of checks offered by the bank, which shall include the name of the depositor. For the purposes of this subparagraph, the term "savings account" shall include a regular passbook, regular statement savings or regular NOW account, so-called.

2.0 Implementation procedures set out in statute

The "18-65" law, so-called, as rewritten by Chapter 234 of the Acts of 2010, is, for the most part, a self-implementing statute.

Procedures to Demonstrate Eligibility

As specified in statute, a consumer who is eligible for an 18-65 account has the responsibility of notifying their bank of his or her status. As set forth in the statute, "(a) consumer shall notify a bank of his eligibility for such accounts and provide proof of age in a form acceptable to the bank."

Posting of Notice and Annual Disclosure To Depositors

The statute requires that notice of the law must be posted within all banking offices. The location and size of such notice are left to the discretion of bank management. In addition, as also specified in the statute, the bank must provide an annual disclosure of the 18-65 law to all depositors in a manner of the bank's choosing. All notices and disclosures, however, are subject to examiner review and comment.

3.0 Policy

The amendments made by Chapter 234, as well as the passage of time, negate many of the 25 questions in the prior Regulatory Bulletin. The Division has retained or updated the following Questions and Answers to address certain issues which may remain under the rewritten law.

1. May a bank choose which accounts are subject to the 18-65 law, designate a single savings account, or create a special savings or checking account solely for the purpose of compliance with the 18-65 law?

No. Under said section 2 of chapter 167D, as rewritten, each qualifying consumer may choose one demand deposit account and one savings account for personal, family or household purposes.

2. What savings accounts are covered by the 18-65 law?

As set out in statute, for purposes of the 18-65 law, a savings account shall mean a regular passbook, regular statement savings or regular NOW account. Regular accounts generally refer to the standard types of accounts offered by the bank; however, consumers should inquire before opening an account.

3. Are all existing bank savings accounts, as defined, or checking accounts available to an 18-65 consumer regardless of any specific requirements for that account?

No. The bank must make one of the following savings accounts available for choice by the 18-65 consumer, which is then eligible to have the protections of the 18-65 law applied to that account: an existing regular passbook, statement savings or NOW account. The bank must also make available a demand deposit account, which is a legal name for a traditional checking account, to the 18-65 consumer, which is also then eligible to have the protections of the 18-65 law applied to that account. The law does not require that all of the bank's accounts be eligible for the 18-65 consumer protections.

4. Can an 18-65 eligible consumer choose a savings or checking account which has unique advantages or benefits based on a higher minimum balance requirement as their 18-65 account and not be subject to the minimum balance requirement as provided for in the law?

If, and only if, that is the bank's existing, regular savings or demand deposit account. If there is an existing, full service, lesser minimum balance savings account and demand deposit account offered by the bank, the bank need only make those savings accounts and demand deposit account available to the 18-65 consumer.

5. The statute allows a reasonable charge, as determined by the Commissioner, against any such account when payment on a check or other transaction drawn on the account has been refused because of insufficient funds or paid despite insufficient funds. Does the statute only cover paper checks?

No. Passage of Check Clearing for the 21st Century Act, known as "Check 21", was recognized in the Commonwealth by Chapter 279 of the Acts of 2006, and clearly demonstrates that the financial payment system is not solely driven by paper instruments. The rewritten 18-65 statute now reflects that as well. The 18-65 statute states that "the term 'check or other transaction' shall include, but not be limited to, a check for purpose of the Check Clearing for the 21st Century Act, 12 USC Sec. 5001 et seq., an electronic funds transfer as defined in section 1 of chapter 167B or regulations thereunder or a transaction processed by an automated clearinghouse." Accordingly, the Division would consider for the purpose of this statute, a check or other transaction to include, but not be limited to, an automated clearinghouse transaction in the form of Back Office Conversion, an Accounts Receivable Entry, and a Point of Purchase, as those and similar terms are defined by the Operating Rules of NACHA, which oversees the Automated Clearing House Network.

Moreover, the 18-65 law is applicable to electronic funds transfers as referenced above. An electronic funds transfer is defined to include any transfer of funds, other than one initiated by a paper instrument, which is initiated through an electronic telephone instrument, or computer or magnetic tape or point-of-sale terminal so as to order, instruct, or authorize a financial institution to debit or credit a consumer asset account. This definition encompasses and includes a debit card transaction.

6. May a bank require an adult cosigner on a minor's account?

Yes. The 18-65 law does not prohibit a bank policy requiring adult cosigners on accounts of minors. Such accounts remain protected under the statute.

7. Is a trust account established for the benefit of a minor subject to the 18-65 statute?

Yes, if and only if the trustee of a trust account for the benefit of a minor meets the age requirements of the law.

8. Is an account established under Massachusetts General Laws chapter 201A, The Massachusetts Uniform Transfers to Minors Act, subject to the 18-65 law?

Yes. As the transfer is irrevocable and the custodian must use the funds only for the minor's benefit, it is the minor's account and is therefore covered until that minor reaches the age of 19.


4.0 Historical notes

This Bulletin was originally issued as former Administrative Bulletin 24-1 issued in 1984 and former Administrative Bulletin 24-2 issued on December 22, 1992 which were re-issued in March 1998 as Regulatory Bulletin 3.3-101. The Bulletin is being revised in October 2010 as a result of the amendments made by Chapter 234 of the Acts of 2010, which becomes effective on November 2, 2010. Although Chapter 276 of the Acts of 2008 had amended the law, this is the first revision of this Regulatory Bulletin since the Division re-issued the Regulatory Bulletins in 1998. This Regulatory Bulletin is based solely on the provisions of said Chapter 234.

Editorial Note:

The Division notes that House 4341 of the 2009-2010 Session of the General Court contained additional language that appears to have been inadvertently deleted when the bill was signed into law as Chapter 234. The deleted language from subparagraph 1 of SECTION 2 of Chapter 234 is in italics as follows:

…transactions at electronic branches and through other electric devices; and that the bank may assess a reasonable charge…

It is provided here due to inquiry as well as allowing for a clearer reading of the statute.

4.0 Authority

G.L. c. 167D, s. 2, subparagraph 1, as most recently amended by Chapter 234 of the Acts of 2010.

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