Israeli bank to pay $8.3 million in compensation to its forgotten customers
Israel’s Discount Bank has agreed to pay approximately $8.3 million in compensation to the holders of so-called “dormant” accounts following a court-approved settlement. These are funds that have remained inactive for years and for which no active account holders have been identified, according to media reports.
In Israel’s Central District, a court approved a settlement agreement between Discount Bank and the plaintiffs in the case regarding so-called “abandoned” or dormant accounts, under which the financial institution agreed to pay compensation of approximately 28 million shekels, amounting to roughly $8.3 million.
Under Israeli law, the term “abandoned property” refers to assets whose owners have not been in contact for a long time, have not conducted transactions, or whose whereabouts are unknown; this may apply to real estate or personal property, as well as bank funds, securities, or accounts that have been inactive for many years.
The essence of the claim was that, according to the plaintiffs, Discount Bank did not take sufficient measures to locate the owners of such accounts, did not report them to the State General Custodian, and continued to retain commissions, which, in the plaintiffs’ view, could have led to the financial institution’s unjust enrichment.
The case materials also noted that the funds in these accounts were not properly invested or transferred in full to the owners, taking into account the potential returns that could have been achieved by transferring them to the management of the state guardian.
The bank, in turn, denied the allegations and stated that it had acted within the law, regularly reported to the general guardian, and fulfilled its obligations, emphasizing that it is the state authority, not the financial institution, that is responsible for locating the owners of such accounts.
After more than four years of mediation, the parties reached a compromise, which was approved by the court, putting an end to the lengthy process, as a result of which the owners of “forgotten” accounts will receive millions of dollars in compensation.
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