Vol. 108 2024 Issue 4 (July/August)

Compliance Connection: Deposit Account Agreements

Deposit Account Agreements

Question: We need to update our deposit account agreements but heard there may have been changes to Indiana law as to how we should make these changes. What is the correct way to amend our agreements under Indiana law?

Answer: The issue of enforceability of amendments to deposit account agreements was the subject of significant litigation in Indiana over the past several years. In 2023 the Indiana Supreme Court issued two decisions addressing this point. First, in Decker v. Star Financial Group Inc., 204 N.E.3d 918 (Ind. 2023), the court held that language in an account agreement allowing the bank to “change any term” of the agreement did not allow the bank to add new language requiring disputes between the parties to be resolved through arbitration. Then, in Land v. IU Credit Union, 218 N.E.3d 1282 (Ind. 2023), aff’d on rehearing, 226 N.E.3d 194 (Ind. 2024), the court held that in the absence of language providing that a depositor’s silence would be deemed acceptance of changes to a deposit account, the customer’s silence did not constitute affirmative assent to the addition of an arbitration clause to the agreement.

While these decisions were specific to the language of deposit account agreements used by the financial institutions involved, banks with deposit agreements containing similar language faced the prospect of deposit account amendments being considered invalid.

Fortunately, beginning July 1, 2024, Indiana law changed to address the challenges presented by the decision in Land. House Enrolled Act 1284 (HEA 1284) adds new language to the Indiana Code that provides:

A deposit account agreement may be changed or amended from time to time, subject to the terms of the deposit account agreement. A depositor’s continued maintenance of a deposit account after the effective date of any change or amendment to the deposit account agreement, as described in a written notice provided by the depository financial institution to the depositor, constitutes prima facie evidence of the depositor’s intent to accept the change or amendment for which notice was provided.

HEA 1284 further defines “written notice” to mean a notice that is in writing, provided to the depositor in any manner in which the depositor has agreed to receive notices, and sent at least 30 days prior to the effective date of any change or amendment to the deposit account agreement. This means that any change or amendment you make to a deposit account after July 1, 2024, should be made in writing 30 days prior to it becoming effective.

While HEA 1284 addresses the challenges created by the decision in Land and when silence may be considered acceptance of changes, it did not address the issues presented by the court in Decker with respect to the ability to add new language to an account agreement when the agreement only provides for “changes to any term of this agreement.” If your bank has a deposit account agreement that provides it may make “changes to any term of this agreement” as opposed to “changes to this agreement,” you should contact your legal counsel for guidance on the best method to ensure all changes to your deposit account agreements remain enforceable moving forward.

This information is provided for general education purposes and is not intended to be legal advice. Please consult legal counsel for specific guidance as to how this information applies to your institution’s circumstances or situation.

Brett Ashton is chair of Krieg DeVault’s Financial Institutions Practice. He counsels a wide array of financial institutions on complex bank acquisitions, litigation defense and avoidance strategies, strategic planning, new product development, negotiation and defense of regulatory enforcement actions, and general regulatory compliance issues.

Email Brett at

Krieg DeVault LLP is a Diamond Associate Member of the Indiana Bankers Association.

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