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4/18/19 9:12 AM

Unclaimed Property Fraud Affects Holders and States

On-line fraud is becoming more prevalent when it comes to unclaimed property claims. 

In a recent case of fraud, the State of Arkansas was found to have paid more than $40,000 to at least one person who used stolen identities to make fraudulent claims through the State’s online claims tool.

Auditor of State Andrea Lea indicated that the fraud used stolen identities to allow the fraudsters to pose as owners of unclaimed property held by the Auditor's office and claim the property for themselves.

A spokesman for the Auditor's office, said that whoever submitted the fraudulent claims had access to the type of documents, such as a passport or driver's license, that the office required as proof of identity for people filling out online claims, and that "this person was an expert criminal". 

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Topics: Due Diligence, Best Practices, Fraud

3/13/19 8:12 AM

Unclaimed Property Regulations - What You Don't Know Can Hurt You

Many people are aware that all states and jurisdictions have abandoned property statutes.  These statutes are the basis for how holders report, what they report and various related matters.  A knowledge of these statutes can make the often-complex filing process a little easier to understand.

However, many unclaimed property statutes also include language permitting the state to make complimentary regulations that further define and explain issues that may not be specifically addressed in the statute.  States regularly update their regulations and these updates may not receive significant exposure. This lack of exposure may create problems for holders because an understanding of both statute and regulations is necessary for a holder to be confident that they are in compliance with a state’s unclaimed property requirements.

One recent example of a regulation occurred in December 2018, when Tennessee proposed a regulation that clarifies the obligations of both the Unclaimed Property Division and holders of unclaimed property. It rewrites pre-existing unclaimed property rules with updated provisions.  The purpose of these proposed rules is to bring the Unclaimed Property Division's rules into compliance with new statutory changes to the Tennessee Code Annotated since the Uniform Unclaimed Property Act was passed in 2017.  The document detailing the proposed regulations states: 

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Topics: Reporting, Best Practices

2/28/19 8:07 AM

Unclaimed Property Risk Associated with Third-Party Administrators

Companies are generally familiar with the unclaimed property that they generate and the process for reporting and remitting that property to the various states.  Having good policies and procedures that help you identify, evaluate, mitigate and ultimately report unclaimed property housed on your books and records allow for companies to comply with state statutes.

But what happens when any unresolved liabilities are not recorded on your books and records?

This situation occurs when a company uses the services of a third-party administrator (TPA).  Companies use TPA’s for a variety of property types, including stocks and bonds, payroll, rebates, gift cards and benefit programs.

In these cases, the TPA’s maintain the records and the company may have limited to no visibility about any unresolved liabilities.  Why is this a problem?  Unless the contract between a company and a TPA includes specific language transferring the escheat responsibility to the TPA, states will consider the company the holder of any related unclaimed property and expect the company to report that unclaimed property.  Obviously, this is a problem if the TPA has all the relevant books and records. 

What should a company that employs TPA’s do to ensure it remains compliant with the unclaimed property statutes?

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Topics: Compliance, Recordkeeping, Best Practices

2/14/19 8:41 AM

Unclaimed Property Holder Due Diligence v. Asset Recovery Letters

Each year in the United States, billions of dollars are escheated to the states. Nationwide, the total value of escheated properties in state custody may well exceed $40- $50 billion. However, even more unclaimed property sits dormant at government agencies, counties, municipalities, courts and other local agencies that will never be reported to the states as unclaimed property. 

Before an item is reported to the states as unclaimed property, outreach in the form of statutorily mandated due diligence letters must be mailed to the last known address of the owner.  However, property held by counties, municipalities, or courts may not be subject to state unclaimed property laws. In these instances, no communication to the owner is required. However, companies may receive letters indicating they are the owners of funds being held by these entities (an “Asset Recovery” letter.) Asset Recovery letters are typically sent by third party firms attempting to help your organization recover monies you did not know you were owed.   

So how does an organization distinguish between a statutorily required due diligence letter and an asset recovery letter?

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Topics: Due Diligence, Best Practices, Corporate Asset Recovery

1/31/19 10:02 AM

Delaware Sends Out New Round of Unclaimed Property Audit Notices

MarketSphere Unclaimed Property Specialists has learned that the State of Delaware began sending out a significant number of unclaimed property audit notices in early January 2019.

Pursuant to 12 Del. C. § 1172(a), the State of Delaware cannot initiate a new abandoned or unclaimed property examination unless the company has first been notified in writing by the Secretary of State that it may enter the Delaware VDA program. 

As we advised in our December blog entitled “Delaware Unclaimed Property Notice Letter”, Delaware had been busy filling companies’ mailboxes with Voluntary Disclosure Agreement (“VDA”) program invitations. Companies had 60 days to respond to the invitation or be referred to the Department of Finance for audit.  Following up on these invitations, the State has now begun mailing unclaimed property audit notices to companies that did not respond timely to these invitations. 

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Topics: Delaware, Reporting, Audit, Voluntary Disclosure Agreements

1/23/19 8:31 AM

Tennessee Unclaimed Property Changes

Within the last 18 months, the state of Tennessee has enacted two new statutes significantly changing their unclaimed property law.

House Bill 420

On May 25, 2017, House Bill 420 was signed into law.  This new law repealed and reenacted the Uniform Unclaimed Property Act (RUUPA) and is Tennessee’s version of the 2016 Revised Uniform Unclaimed Property Act.  It included reductions in dormancy periods, dormancy trigger changes and new due diligence requirements, among other measures.  It also introduced new provisions for certain property types, including stored value cards, and provided for new reporting and payment requirements.

Dormancy Changes

The biggest change to the Tennessee unclaimed property law included the reduction from five to three years in the dormancy periods for most property types. However, under the new law, payroll properties have a one- year dormancy and stored value cards have a five-year dormancy.

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Topics: Compliance, Reporting

1/11/19 11:18 AM

Delaware Clarification Regarding Unclaimed Property Annual Filing requirements

MarketSphere has been made aware that holders may be receiving notices from the State of Delaware.  The following is a recent posting to the Unclaimed Property Professionals Organization (UPPO) website concerning these notices detailing interaction with the Delaware State Escheator. 

UPPO recently received reports that Delaware unclaimed property staff has notified some holders that they are required to submit a copy of their policies and procedures as part of their annual filing. In response, UPPO reached out to Delaware State Escheator Brenda Mayrack, requesting clarification. Following is her response:

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Topics: Delaware, Reporting

1/8/19 8:29 AM

A New Delaware Unclaimed Property Lawsuit

In December 2018, Univar, Inc. filed an action in U.S. District Court asking the Court to stop an existing unclaimed property audit being conducted by Kelmar Associates, LLC.  In their complaint, Univar seeks a declaratory judgement that the audit violates several matters, including Delaware’s Escheat law, federal common law and certain clauses of the U.S. Constitution.

 In December 2015, Delaware issued an audit notice to Univar, indicating that the audit would be conducted by Kelmar as the state’s agent. Univar disputed the legitimacy of the audit including calling into question Kelmar’s audit protocols. On October 30, 2018, Delaware issued a subpoena to Univar requiring Univar respond to Kelmar’s document requests, which Univar had not responded to. In response to the subpoena, Univar filed this complaint to stop the audit. Among other matters, the complaint alleges:

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Topics: Delaware, Audit

12/11/18 8:35 AM

Fall Unclaimed Property Filings Are Done! No Time To Rest.

Holders breathe a sigh of relief when December rolls around.  Fall unclaimed property filings are mostly complete with only a couple of December deadlines remaining.  Time to sit back and relax through the holidays, right?  Not if you want to make your spring and summer unclaimed property reporting seasons run smoothly.

The first spring unclaimed reporting deadlines start in March and roll on from there in a steady stream until the summer reports due at the beginning of July. Mixed in between now and those spring and summer deadlines are holidays, year-end close, financial reporting requirements, quarter closes, and all your other day to day tasks and deadlines not related to unclaimed property. Below are a few things that you and your unclaimed property team can start doing now to keep ahead of the game.

  • Reissue checks for the due diligence responses you received during the fall mailings. Besides just being a good business practice, reissuing these items sooner rather than later will help keep down the complaints from property owners regarding delays in receiving their money. These properties have been dormant for years. Now that the owners know about them, they want their money as soon as possible.
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Topics: Compliance, Due Diligence, Reporting, Best Practices

11/28/18 7:32 AM

Corporate Asset Recovery: Third-Party Checklist

Amounts owed to you (unclaimed property) can go unclaimed for a myriad of reasons.  Your company could have moved locations.  They could have changed their process or contact point for payment receipt.  A check could literally be lost in the mail.  Once those items are lost and go unreconciled they turn in to unclaimed property. Unclaimed property can be funds held by a state/jurisdiction resulting from statutory escheat requirements or they can be outstanding balances held by a government entity (that will never be escheated) until you or your organization come forward. 

Whether your unclaimed property is held by a state unclaimed property department or government entity, it is important to know there are two ways to get your property; search and claim it yourself or utilize a Third-Party Recovery Firm.

A Third-Party Recovery Firm is a company who assists owners in the identification and recovery of unclaimed property.  For the most part, Third-Party Recovery Firms will contact your organization about funds they have located.  If you or your organization has decided to utilize a third-party to recover unclaimed property it is important to consider the following checklist:

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Topics: Best Practices, Corporate Asset Recovery