Thursday, April 28, 2011

The Economy Is Humming Again (At least, for Delaware)

While the vitality of the broader U.S. economy continues to be mixed, but improving, Delaware continues to revise (and revise) its financial revenue projections upward.  According to a recent article in Bloomberg Businessweek (via the AP), the Delaware Economic and Financial Advisory Council recently increased its revenue estimate for the current fiscal year by 2 percent (or $63 million) and next year's estimates by 3 percent (or $105 million).  Among the reasons for the upward spike?  That's right, unclaimed property collections.

Regular readers of this blog may recall that just last month, Delaware announced that unclaimed property revenues were "well above" expectations.  Well, that was last month.  This month, according to the article, the proposed budget for the next fiscal year assumes "a $50 million increase . . . in expected abandoned property collections."     

Tuesday, April 26, 2011

Article Spotlights Difficulty of Claiming Unclaimed Property

A recent article by Bob Dyer on Ohio.com recounts the difficulty that at least one resident of the Buckeye state had in trying to collect unclaimed property.  In the example recounted in the article, the claimant was originally unable to demonstrate that the address reported (an old business address at a building no longer in existence) was his former place of business.  In this instance, the story has a happy ending.  With the assistance of Mr. Dyer and the Ohio Department of Commerce, the owner was eventually able to get his money.

The underlying irony, however, is a familiar one to those in this field:  an individual is often stymied in his or her efforts to reclaim the property for the very same reasons that the property was unclaimed in the first place.  It could be that there is a typo in the holder's record of the owner's name.  This, of course, leads to difficulty when someone with a different name (the correct one) tries to reclaim it.  So too with mistaken addresses:  the wrong zip code or street address on a dividend payment not only misdirects the owner's funds, but makes it hard for that person to prove to the state that he or she is the proper claimant.

There is little that an owner can do to prevent such problems, other than regularly reviewing their contact information and notifying the holder quickly regarding any errors.  But those who are excited to find their name on the state's unclaimed property list would be well advised to remember that is the beginning, not the end, of the claim process.

Monday, April 25, 2011

Unclaimed Property Held By Life Insurers: California Fires A Shot Across the Bow

One of types of unclaimed property with the most history is life insurance and its proceeds.  In fact, one of the U.S. Supreme Court decisions dealing with the constitutionality of unclaimed property laws -- Connecticut Mutual Life Ins. Co. v. Moore -- upheld  the constitutionality of the New York Abandoned Property Law as applied to non-New York life insurance companies who held policies for New York residents.  While life insurance proceeds and unclaimed property have a long history with one another, that doesn't mean that there are no longer disputes concerning this type of property.

According to a recent article by Darla Mercado in Investment News, John Hancock Financial Services just agreed to a $20 million settlement with the State of California concerning unclaimed life insurance proceeds.  Nor is California's interest limited to John Hancock, the article quotes John Chiang, California's State Controller, as promising further actions -- including litigation if necessary -- to make sure that life insurance companies report and deliver unclaimed property owed to the states.  For life insurers that do not have comprehensive and robust unclaimed property compliance programs, this should be a wake up call.

Wednesday, April 20, 2011

The Upcoming Conflict Between Unclaimed Property Law and Consumer Privacy

This week, the Louisiana state legislature will begin to consider House Bill 128, which is a consumer protection proposal that would prohibit merchants from requesting name, address, telephone, or zip code information from any consumer in connection with a cash, gift card or credit card payment.  The Louisiana legislation comes only a few months after the California Supreme Court ruled that a retailer's request for zip code information in connection with a retail purchase violated state privacy laws. 

Why is this a big deal?  Because some other states, most notably New Jersey, are going in precisely the opposite direction, and trying to require merchants to obtain address (or at least zip code) information in connection with the sales of gift cards.  As more and more gift card issuers seek to capitalize on favorable unclaimed property laws in their states of incorporation, other states - like New Jersey - are pushing back by trying to require gift card sellers to obtain (and retain) name and address information.  While this is generally pitched as a consumer friendly requirement (in that it makes it somewhat more likely* that a gift card owner can reclaim his or her funds), consumer protection laws come in many varieties.  For every citizen who is glad to be able to reclaim a gift card from the state, there are just as many who are annoyed at having to provide personal information at the time of sale, or who are afraid that information isn't safe when retained by the merchants.

Unless the states reach some sort of consensus on this issues, merchants will be faced with the very real possibility of a patchwork of laws throughout the various states with different (and often conflicting) requirements.

*  Requiring consumer address information makes the property more likely to be claimed from the state if it is ever escheated only if the retailer is required to get complete name and address information.  In New Jersey's case - where a merchant is only required to obtain zip code information - there is no information for the state to honor reclaims.  Whether requiring zip code only is an accommodation to busy merchants, or a revenue generating measure for the state is an open question for another day.

Tuesday, April 19, 2011

UPPO to Offer Foreign Unclaimed Property Webinar

Unclaimed property laws outside the U.S. have been a regular topic here for quite some time.  Those looking to bolster their knowledge and understanding of non-U.S. unclaimed property laws, and how U.S. laws deal with property owed to non-U.S. owners may want to check out the webinar below.

On May 26, 2011, the Unclaimed Property Professionals' Organization is hosting a webinar on Foreign Unclaimed Property.  The webinar will cover the basics concerning the reporting and delivery of unclaimed property owed to non-U.S. holder, and provide information concerning the unclaimed property laws of jurisdictions outside the U.S.  (Full disclosure:  the author of this blog is one of the presenters).

The UPPO is probably the most well-known and active organization committed to representing the holders of unclaimed property.  Along with these webinars, the UPPO offers other educational information, networking events, contacts with state officials, and other invaluable opportunities for unclaimed property professionals.  Whether you are new to the field of unclaimed property and looking for help with the basics, or a seasoned veteran looking to expand your knowledge base and contacts, UPPO membership is highly recommended.

Monday, April 18, 2011

New Zealand Supreme Court Upholds Unclaimed Money Act

It is becoming more and more common that countries outside of the United States are enacting or implementing unclaimed property laws, or are enforcing pre-existing unclaimed property laws with new zeal (forshadowing pun intended).  Of course, along with such enforcement also comes controversies regarding the validity or scope of unclaimed property acts (generally, brought by the holder as a defense to a government's claim).  Last week saw the end of one such controversy in New Zealand.

Last week, the Supreme Court of New Zealand upheld the validity of the 1971 Unclaimed Money Act, and ruled that the Act applied to certain foreign currency drafts issued by 3 New Zealand banks.  (See accompanying article about the lawsuit published on Stuff.co.nz).  Specifically, the banks argued that since the currency drafts were "presentment" items -- that is, the banks' liability to pay moneys under the drafts was conditional on the instruments being presented for payment -- they had no obligation to pay until the condition was fulfilled, and hence no obligation to turn the underlying monies for unpresented drafts to the government as "unclaimed."  The Suoreme Court rejected that argument.

In so doing, the Court followed precedent set in the 2004 case of Thomas Cook v. Inland Revenue, wherein the Privy Council (formerly the court of last resort for New Zealand and many other Commonwealth countries) upheld the validity of the 1971 Unclaimed Money Act against a similar challenge regarding presentment, noting that it was "nonsense" to argue, as the banks seemed to, that "money can only become unclaimed money once it has in fact been claimed."

Friday, April 15, 2011

Did You Know? Tax Day (Except that tomorrow is a holiday in the District of Columbia, but is observed today, so tax day is now on Monday) Edition

It's time again for Did You Know? On DYK days here at Escheatable, we try provide you with interesting information regarding the unclaimed property laws to amaze your friends and frighten your enemies.

Today is Tax Day (although its really on Monday).  In any event, thousands of individuals are rushing to file their taxes and make payments (if necessary) to Uncle Sam.  Of course, as any unclaimed property professional knows, when so many payments are coming in at once, some are likely to get missed.  Uncle Sam, like other large organizations, is not immune.  In fact, according to a search done on Missing Money, the IRS or Internal Revenue Service has over 200 items of unclaimed property that are being held by the states.

Thursday, April 14, 2011

Wisconsin Returns Nearly $500,000 in One Day

According to an article posted by NBC 15 in Madison, Wisconsin, the Wisconsin Treasury Department returned nearly $500,000 to citizens of the Badger State in one day.  Half of that total amount was to just two owners, who were entitled to claim more than $100,000 a piece from the state.  According to the article, this was the largest one-day return of funds in state history. 

This stands as another reminder that, while the majority of property that gets escheated to the state are small-dollar amounts, some claims really are worth the trouble.

Monday, April 11, 2011

Unclaimed Property: Home Shopping Edition

In the market for a sterling sombrero keychain?  Maybe some sterling silver ice cream dishes?  You don't have to go to the mall and wait on line, you can buy from the Texas Unclaimed Property Division's eBay site!

Pursuant to the Texas Unclaimed Property Act, the Treasurer has the obligation to sell all abandoned property (other than cash or marketable securities) to the highest bidder.  While in earlier years that might have meant an under-publicized auction at a government facility, with little interest and few bidders, today's unclaimed property departments are turning to online sources (such as eBay) to drum up interest, and increase the receipts from auctions.  So, whether your interested in seeing how unclaimed property departments are running today's auctions, or you are just looking for an 18K Oil Derrick Tie Tack (and, really, who isn't?), be sure to check it out.

Thursday, April 7, 2011

An Unclaimed Property Lesson From (Old) Jersey

As you may know, the name of the great State of New Jersey (where Escheatable is based) comes from the Isle of Jersey in the English Channel.  The Isle is not part of the United Kingdom, but is rather a crown dependency.  In any event, Her Majesty's Receiver General of the Isle of Jersey maintains a website that includes, among other things, a concise summary describing the historical development of, and differences between, escheat and bona vacantia.  As we've noted earlier, although the term escheat is now generally used in the context of referring to modern state unclaimed property laws, this is really a misnomer.   As Her Majesty's Receiver General points out, escheat is a term that generally applies to real estate (i.e., land) while the separate doctrine of bona vacantia applies to "moveable" goods (i.e., things).

One stark contrast between escheat (actually, bona vacantia) in Jersey and the United States is that such laws in the U.K. and its crown dependencies actually give the Crown title (i.e., ownership) not just custody of the property.  Here, of course, U.S. states generally do not get to take ownership of unclaimed property - it is merely held in trust for the benefit of the rightful owner.

Wednesday, April 6, 2011

Missouri Unveils "Unclaimed Property Kiosks"

Over the past several years, retailers have turned to kiosks to rent moviescash in coins and even to sell song downloads.  Now, Missouri is turning to kiosks to help owners locate unclaimed property.  According to an article by Mark Slavit of ConnectMidMissouri, Missouri State Treasurer Clint Zweifel installed the first such kiosk in January at the Missouri Department of Licensing in Columbia, MO.  So far, according to the article, kiosk searches have accounted in nearly $6000 being returned (with an average claim amount of $55). 

Regular readers of Escheatable know that Missouri is no stranger to cutting edge owner reunification programs.  Among the state's varied methods are "Operation Extra Mile" to assist veterans in finding abandoned property and a novel E-Mail notification program where residents can register to have unclaimed property information sent directly to them.  Missouri is - again - to be commended for its efforts.

Monday, April 4, 2011

Unclaimed Property Crime Blotter: Two Texans Charged With Fraudulently Claiming Unclaimed Property (from Indiana)

According to an article by Stephen Dean on Examiner.com (Houston) two Texas women have been indicted for falsely posing as claimants entitled to unclaimed property.  According to the article, two Texas women stole approximately $300,000 in unclaimed tax refunds using rental mailboxes in the Houston area.  When they made an attempt to claim an item of more than $100,000 from Indiana Unclaimed Property Department, however, the scheme began to unravel.   

Suspicious unclaimed property department employees tracked the phone numbers and mailing addresses used in connection with the claim, and forwarded the information to law enforcement and U.S. postal authorities for investigation.  Ultimately, the two women were arrested, and are now facing federal mail fraud claims. 

Many unclaimed property claimants are dismayed and annoyed with how long the process takes and the amount of paperwork involved.  Unfortunately, it is precisely because of alleged frauds like this that make the refunds process cumbersome.

Friday, April 1, 2011

Breaking News: New York Budget Approval Means Abandoned Property Law Changes Coming Soon

As reported in a variety of sources, including The Daily News, the Albany Times-Union, and  Bloomberg (the financial news site, not the Mayor) New York state legislators reached an agreement with Governor Cuomo regarding the $132.5 billion budget.  As we discussed here previously, the Governor's initial budget proposal relied upon a variety of changes to the New York APL to increase revenue.

The final budget bill includes a variety of changes to New York's Abandoned Property Law.  Among the changes are the following:
  • Dormancy period for bank deposits shortened to 3 years (from 5);
  • Dormancy period for property held by courts shortened to 3 years (from 5);
  • Dormancy period for escrows/security deposits shortened to 3 years (from 5).
When the N.Y. Office of Unclaimed Funds publishes guidance concerning the new laws, we will post a link.