When you add money to your Serve Jackson Hewitt Account, the funds will be placed by us into one or more custodial accounts (“Custodial Account(s)”) we maintain for the benefit of Serve Accountholders at one or more Federal Deposit Insurance Corporation (“FDIC”)-insured banks (currently American Express National Bank). These custodial accounts will be set up to provide pass-through FDIC insurance. Subject to the limitations set forth below, this means that if a bank holding a custodial account fails, you should be insured by the FDIC up to the per-depositor coverage limit then in place (currently $250,000 in most instances). Note that the FDIC insurance maximum applies to all of the funds that you have on deposit with the bank that fails, including funds that you have in deposit accounts with the bank other than your Serve-related funds in the custodial account.
Your Serve funds will not receive the benefit of FDIC insurance before they are placed in one of the custodial accounts referenced above. We will place funds into the custodial accounts not later than the business day after those funds are credited to your Serve account. FDIC insurance coverage is contingent upon our maintaining accurate records and on determinations of the FDIC as receiver at the time of a receivership of a bank holding a custodial account.
FDIC pass-through insurance protects funds placed on behalf of a Serve Accountholder against the risk of loss (up to the then applicable FDIC deposit insurance limits) should any FDIC-insured bank(s) where we maintain custodial account(s) fail. FDIC pass-through insurance does not protect you against the risk of our insolvency. In the unlikely event of our insolvency, funds we place in a custodial account should be protected from claims by our creditors; however, it is possible that funds that we hold before placement in a custodial account will not be protected from claims by our creditors. Even if funds in your Serve Jackson Hewitt Account (whether held by us or held in a custodial account) are protected from claims by our creditors, in the unlikely event of our insolvency, it is possible that you will not have access to those funds while court or other legal proceedings are ongoing.
FDIC pass-through insurance also does not protect you against the risk that an attempted funding of your Serve Jackson Hewitt Account might fail to complete or be reversed (for example, if a check that you deliver to us is dishonored or a related credit is reversed after initial honor).
