New York Passes "Finder" Regulation: Recently, we mentioned that Ohio sent a cease and desist order to an unclaimed property "finder" firm that was allegedly charging people for unclaimed property claim forms (that are available free from the Ohio Department of Commerce website). As we mentioned, there is no fee to claim property from the state, but most individuals (and even some businesses) that are contacted by property "finder" firms are unaware of that fact. New York, for its part, is trying to make sure that consumers are educated before entering into agreements with finder firms. New York Senate Bill 7690 would require all contracts between consumers and finder firms to include contact information for the State Comptroller's office, as well as the following language in at least 12 point font:
ABANDONED FUNDS HELD BY THE STATE CAN BE OBTAINED DIRECTLY FROM THE OFFICE OF THE STATE COMPTROLLER BY THE OWNER OF SUCH FUNDS WITHOUT PAYING A FEE. THESE FUNDS ARE HELD INDEFINITELY BY THE OFFICE OF THE STATE COMPTROLLER.The bill also reiterates that the maximum amount that can be charged by a finder firm is 15% of the value of the property. The bill passed the Senate on 6/19 and is now pending in the State Assembly.
More Thoughts on the New Jersey Gift Card Law: Last week, Governor Christie signed Senate Bill 1928 into law, which revised New Jersey's 2010 gift card legislation. Briefly, the bill extended the dormancy period for gift cards from 2 years to 5 years, and delayed implementation of a requirement that retailers obtain zip code information at the point of sale for 4 years. While many gift card issuers applauded the amendments, not everyone is happy. According to an article by Andrew Kitchenman in NJBiz the New Jersey Retail Merchants Association (among, presumably, several others) is not happy with the amendments (or, more specifically, the amendments that were made to the amendments right before the bill was put up for a vote). As we covered here previously (sadly, at great length) the original amendments considered by the State Assembly would have undone the 2010 legislation altogether, removing gift cards from the scope of the unclaimed property act and eliminating the zip code collection requirement. As Mr. Kitchenman's article recounts, however, the repealing legislation got watered down to merely delaying legislation during negotiations on the State House floor.
Opponents of the legislation are not giving up. According to an article in NJBiz last week, the NJRMA is committed to having at least the zip code collection provisions repealed before they come into effect in 4 years. Indeed, Assembly Bill 3189 has already been proposed in Trenton, which would (consistent with earlier proposals) completely remove gift cards from the scope of the NJ Unclaimed Property Act.
Delaware Considering Parallel VDA Process: Delaware is one of many states that has a voluntary disclosure agreement (VDA) process for unclaimed property. Under a VDA, a holder that is out of compliance with the unclaimed property law comes forward to the state, and agrees to perform an internal review of its own records (often on a relatively expedited basis) to turn over past due amounts. In exchange for that self-identification and remediation, the state generally offers amnesty in the form of a waiver of interest and penalties that may otherwise be assessed on late reported amounts. As many in the unclaimed property industry can attest, and as has been widely reported, VDA arrangements with the State of Delaware have historically been fraught with peril. For starters, in order to perform a VDA with Delaware, the holder has to agree to review its own records for possible noncompliance back more than 20 years to 1991. As if the prospect of reviewing a fifth of a century worth of records wasn't enough, the state was unique in its willingness to nonetheless audit a holder who came forward under a VDA.
Perhaps to remedy its reputation, Delaware is considering a one-time amnesty program run outside of normal audit staff in the Division of Revenue. Specifically, the Delaware legislature unanimously passed Senate Bill 258, which would create a short-term amnesty program under the authority of the Secretary of State. Under the proposed legislation, which has been sent to the Governor for signature, holders who come forward by June 2013 (and pay outstanding amounts by June 2014) will only have to review records back to 1996. Holders who come forward by June 2014 (and pay by June 2015) will only have to review records back to 1993. If the bill passes, interested holders are advised to act fast: by the express terms of the legislation, holders that receive audit notices from the State Escheator are not eligible to participate in this amnesty program.