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KeepUP™ Blog

5/9/18 8:37 AM

Modern Communication In Unclaimed Property Due Diligence

by Jen Duran

Person hand taking chalk drawn email signMost unclaimed property practitioners are familiar with the concepts of “contact” and “due diligence.”  However, guidelines for both contact and due diligence were primarily created before modern communication formats like email and online accounts became prevalent, making it somewhat difficult to discern whether an owner has met the statutory requirements for indicating an interest in the property

With the introduction of the Revised Uniform Unclaimed Property Act (RUUPA) and the efforts of individual states, these definitions are beginning to evolve. While these changes present new challenges, they also offer new opportunities for holders to modernize their unclaimed property outreach, while simplifying the process for owners trying to maintain contact and claim their funds.

Expanded Definition of Contact

For starters, RUUPA begins modernizing the definition of contact by including the definitions of “Electronic” and “Electronic mail” within the statute.  It further enables the use of modern communication to establish contact by broadening the definition of contact as well as specifically allowing online logins and online activity related to an account to constitute contact from the owner. 

In addition, individual states are beginning to recognize that the old definition of contact does not reflect how individuals and businesses communicate and manage their financial affairs.  For example, New York has introduced a bill redefining owner contact related to a variety of financial accounts.  Should this bill pass, owner contact would include electronic communication in addition to written or personal contact, and could include:

“WRITTEN CORRESPONDENCE, A TELEPHONIC OR VOICE OVER INTERNET PROTOCOL (VOIP) COMMUNICATION, A TRANSACTION EFFECTED THROUGH AN AUTOMATED CLEARING HOUSE (ACH) OR SIMILAR ELECTRONIC FUNDS PROCESSING METHOD, SIGNING ON TO A PASSWORD PROTECTED ACCOUNT IN WHICH SECURITIES MAY BE ACCESSED BY ITS OWNER, OR EFFECTING A TRANSACTION IN THE OWNER’S ACCOUNT, INCLUDING AUTOMATED TRANSACTIONS THAT HAVE BEEN AUTHORIZED BY THE OWNER.”

As of the publication of this blog post, NY Senate Bill S5059A remains in committee.

With updates such as those found in RUUPA and individual state statutes, holders can now begin looking into additional forms of contact such as those listed below, always ensuring that individual state statutes are followed.

  • Email
  • Online Account Logins
  • Online Banking Transactions
  • Automated Transfers
  • Other Online or Electronic Communications
Expanded Due Diligence Requirements

With the introduction of RUUPA and changes to various individual state statutes, the concept of statutory due diligence is also beginning to modernize.  RUUPA specifically requires that:

“IF AN APPARENT OWNER HAS CONSENTED TO RECEIVE ELECTRONIC-MAIL DELIVERY FROM THE HOLDER, THE HOLDER SHALL SEND THE NOTICE DESCRIBED BOTH BY FIRST-CLASS UNITED STATES MAIL TO THE APPARENT OWNER’S LAST-KNOWN MAILING ADDRESS AND BY ELECTRONIC MAIL, UNLESS THE HOLDER BELIEVES THAT THE APPARENT OWNER’S ELECTRONIC-MAIL ADDRESS IS INVALID”

To date, Utah, Tennessee and Illinois have adopted the RUUPA language related to electronic due diligence, while others have implemented their own requirements.  In Pennsylvania, for example, if an owner has consented to electronic communication, electronic mail may be sent in lieu of first-class mail, while in Texas, electronic mail may only be sent to designated representatives in lieu of first-class mail.

Utilizing electronic due diligence comes with its own unique benefits and challenges.  It is certainly more efficient and cost effective, particularly if owners are accustomed to receiving electronic communications from the holder.  However, there are challenges to consider:

  • Multiple or outdated owner email addresses
  • Complying with span laws and regulations
  • Logistics of implementing bulk email for unclaimed property
  • Owner privacy and security concerns
  • Increased potential for fraud

As long as these areas are addressed, the benefits to both the holder and the owner can far outweigh the potential challenges.  From an owner perspective, it’s much simpler to communicate with the holder and reset dormancy, improving the customer / employee / vendor experience and reducing lost assets.  From a holder perspective, establishing and maintaining electronic contact eliminates the need for due diligence.  When due diligence is necessary, the ability to utilize electronic communications and responses dramatically reduces the time and expense associated with printing and mailing paper due diligence. 

Best Practices for Electronic Contact and Due Diligence

  • Ensure accurate and up to date email addresses
  • Incent regular electronic contact such as online logins and transactions
  • Send electronic mail from known corporate email addresses
  • Send clearly branded electronic communications with links to FAQ's
  • Create a centralized data warehouse for tracking contact and contact information from across the organization
  • Retain detailed records substantiating all electronic contact
  • Ensure compliance with privacy and security requirements when including personal information

For more information regarding due diligence or other unclaimed property challenges, contact MarketSphere Unclaimed Property Specialists for a free consultation.

Topics: Compliance, Due Diligence, Best Practices