Bank Watch

Bank of America broke law protecting accounts of child actors, court finds

Charlie Chaplin, left, and Jackie Coogan appear in a scene from Chaplin's 1921 silent film, "The Kid." An ongoing lawsuit accuses Charlotte-based Bank of America of violating a California law named after Coogan and designed to protect the earnings of child actors.
Charlie Chaplin, left, and Jackie Coogan appear in a scene from Chaplin's 1921 silent film, "The Kid." An ongoing lawsuit accuses Charlotte-based Bank of America of violating a California law named after Coogan and designed to protect the earnings of child actors. Associated Press

Bank of America broke a law that bans withdrawals from the bank accounts of child actors without first getting court approval, a California appeals court ruled this week.

In a class-action lawsuit, the Charlotte bank is accused of violating a California law designed to protect 15 percent of a child actor’s earnings. The bank made illegal withdrawals from the accounts, including to charge them monthly service fees, by failing to get required approvals ahead of time, the suit claims.

The lawsuit, filed in 2012, alleges the bank violated Coogan Law. The law is named after Jackie Coogan, a child actor who starred in silent films in the 1920s and whose parents squandered his earnings.

Coogan Law requires court approval before withdrawals are made from the trust accounts that hold child actors’ earnings. According to court documents, banks can charge fees to the accounts, but the charges must be made directly to the parent or guardian of the actor. Court approval can then be sought to withdraw the fees from the trust accounts.

Bank of America’s withdrawals were “impermissible,” the appeals court said.

The appeals court decision comes after a lower court had ruled in favor of Bank of America.

Bank of America spokesman Bill Halldin said California courts have consistently agreed that service fees can be charged on the trust accounts.

The question that has been raised in this case, he said, is whether bank service fees should be paid with the funds in the trust accounts or with other funds earned by the actor and under the control of a parent or guardian.

Bank of America has argued, among other things, that the debits it made from the accounts for the fees did not qualify as withdrawals, according to court documents. Federal law preempts any state law that bans such withdrawals, the bank has also argued.

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Twitter: @DeonERoberts

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