Category: Unclaimed Property Alerts

Recent cases have showcased a novel way to attack a company's unclaimed property compliance efforts. Or highlight the lack of unclaimed property compliance in some cases. Find out what you can do to reduce your risk from False Claims Act lawsuits, their treble damages and private right of actions. Yes, that's right - plaintiffs don't have to wait until a state administrator comes after you. If someone has knowledge that your company is not in compliance, they can bring the lawsuit themselves. And recover handsomely for doing so. What is a False Claims Act? According to the Legal Information Institute, run by the Cornell Law School, a False Claims Act is a "statute setting criminal and civil penalties for falsely billing the government, over-representing the amount of a delivered product,…

With more than half of all gift cards sold in the fourth quarter alone, the latest round of lawsuits is a big wake-up call for many retailers that issue gift cards. On October 24, 2019, a well-known plaintiff's class-action law firm sued dozens of gift card issuers because their gift cards allegedly did not comply with the Americans With Disabilities Act (ADA) and two other similar New York state laws. The lawsuits soon expanded to California as well. Specifically, the lawsuits say that the gift cards did not contain Braille print, and thus discriminated against visually impaired individuals. On April 23, 2020, the U.S. District Court of the Southern District of New York said that retailers do not have to provide Braille on gift cards. Does the Lack of Braille…

A new bill out of the Illinois legislature is looking to make several changes to the Illinois unclaimed property laws. The changes would affect cryptocurrency and virtual currency, retirement accounts, holders' negative reporting requirements, and more. The Illinois bill is House Bill 4573 (opens externally). HB 4573 was introduced on February 5, 2020 and was then assigned to committee on March 12, 2020. Check back for more updates as the bill progresses (or dies). Illinois and Unclaimed Virtual Currencies One of the newest forms of intangible personal property to hit the world is cryptocurrency. And as one would expect, the state laws regulating anything new are lagging behind. HB 4573 defines virtual currency as "any type of a digital unit, including cryptocurrency, used as a medium of exchange, unit of…

On January 30, 2020, Maine's governor Janet T. Mills signed into law HP 1164/LD 1612 which affects the amounts reportable as abandoned gift cards. Over the next three years, the reportable amount will be eliminated. Maine Gift Cards as Abandoned Property Previously, Maine required 60% of the outstanding gift card obligation to be reported as unclaimed property once it had been abandoned for two years (see Section 2067). By 2022, that amount will be zero. Under Public Law 553, the reportable obligation is reduced in 2020 to 40% and then again in 2021 to 20%. Finally, in 2022, no amounts will be reportable for unclaimed gift cards in Maine. The law previously exempted gift cards sold by a single issuer if the issuer sold less than $250,000 in gift cards…

I've had several discussions with fellow lawyers recently about unclaimed property and about whether unclaimed property laws apply to lawyer trust accounts. And nothing like a good networking event question to trigger a blog post, right? Not to mention, one of the fastest and easiest ways to get disbarred is to inappropriately manage your IOLTA account or other client funds. What is Unclaimed Property? Unclaimed property is a set of state laws that govern checks, bank accounts, and other financial assets that are abandoned. Meaning that you do not know the rightful owner of the funds or cannot find the rightful owner if you do know who they are. Or just cannot make the owner cash the check, no matter what. Instead of a holder, in this case a lawyer,…

Effective January 1, 2020, the SECURE Act ("Setting Every Community Up for Retirement Enhancement Act”) makes some significant changes to how financial institutions handle retirement plans in unclaimed property. Specifically, there are three major provisions of the SECURE Act which you need to be aware of: Required Minimum Distribution Age The RMD age moves from 70 1/2 to 72. Inherited IRAs Inherited IRAs must be distributed within 10 years of the owner's death. Maximum Deductible Contributions Age The upper age limit to make deductible contributions is removed. How These Changes Affect Unclaimed Property Required Minimum Distribution Age Typically, dormancy is triggered on individual retirement accounts (IRAs) when the account owner reaches the RMD age plus the requisite inactivity period (usually 3 or 5 years). For those that reach 70 1/2…

Whew! I just looked at the calendar and realized that October is over! Hope you were able to get home and enjoy the Trick or Treaters on Halloween. Late September and all of October are always busy times for unclaimed property holders. You've got compliance deadlines, audit demands, and just general business things to take care of. But this September and October were especially busy in the world of unclaimed property. Let's take a look at everything that happened. Unclaimed Property Compliance Never Stops Forty-four jurisdictions have reports due between October 31 and November 1. That means holders are always compiling the reports, making last minute changes, getting said reports approved, signed, and paid, and issuing the remaining checks or payments in response to due diligence letters this month. This…

On June 10, 2019, Texas passed changes to how unclaimed property is reported in the state in HB 3598, as well as provisions relating to audits and owner claims. The law is effective immediately. New Texas Consolidated Reporting The biggest change that will be noticed immediately for holders is the new consolidated reporting requirement. Under the new law, all companies of an affiliated group must file one report for the entire affiliated group. This is commonly referred to as "consolidated reporting" within the industry. An affiliated group is "one or more entities in which a controlling interest is owned by a common owner, either corporate or noncorporate, or by one or more of the member entities." For unclaimed property purposes, controlling interests means more than 50 percent interest - voting…

Update: The law was approved and signed by the governor on July 5, and is effective January 1, 2020. The Hawaii legislature has sent legislation to the governor for signature that would require retailers and restaurants to provide cash back to gift card owners for balances under $5. Hawaii Gift Cards Hawaii permits retailers to sell gift cards to consumers so long as there are no service fees, including dormancy or inactivity. Hawaii also limits activation fees to the lesser of 10% of the gift certificate or $5. In accordance with the CARD Act, Hawaii also prohibits expiration dates less than five years after the date of issuance for gift cards. In the case of paper only gift certificates, the state does permit a two year expiration date. Awards, loyalty,…

Delaware is anticipated to send out additional unclaimed property notices this month to companies that may not be in compliance with the state's abandoned and unclaimed property laws. In the past, Delaware has targeted the large Fortune 500 companies for both its audits and voluntary disclosure program. As many of these companies have completed audits and voluntary disclosure programs, the new targets have been progressively smaller companies. This round of unclaimed property notices will likely hit companies with annual revenues as low as $100 million. That means that smaller and mid-market companies will have to learn about unclaimed property. And how to navigate the pitfalls of a multi-state audit with a contingent fee auditor. Who Is At Risk of Getting a Delaware Notice Delaware has over a million entities incorporated…