Highlights of ULC Discussion at UPPO
In February, the Uniform Law Commission submitted a new draft of the Revised Uniform Unclaimed Property Act (RUUPA) after months of discussing, negotiating and adjusting. As with other drafts, this version of the RUUPA was prepared after receiving input from unclaimed property stakeholders across the industry.
The process of drafting a uniform act is long and involved, and although no state is required to adopt the ULC’s model act, it does provide a forum for centralizing the industry’s best practices and helping resolve disagreements between parties with conflicting interests in the unclaimed property field.
Eventually, the RUUPA, which is four times as long as the 1995 version of the act, will very likely affect the way state unclaimed property laws develop—even if all states don’t adopt the entire law. For that reason, it’s a good idea to keep up with what’s going on.
At the recent 2016 annual meeting of the Unclaimed Property Professionals Organization (UPPO) in Palm Springs, California, panelists had many things to say about the ongoing development of the ULC’s RUUPA. Here are a few highlights:
- For the insurance industry: There’s a new provision that, if included in state laws, will require state administrators to keep policyholders’ personal information private. This was seen as important for every industry, so a request has been made to put it into the draft as a whole, applying to all industries.
- Regarding third-party auditing: Holders and their advocates have been putting pressure on the drafters of the revised act to protect the rights of the holder. Holders have felt that auditors have too much leeway to decide the scope of an audit. The new act attempts to limit the reach of auditors, but the point was made that holders without good records maintenance still will likely face estimation during an audit.
- On the subject of gift cards: In terms of unclaimed property, this area is relatively new. It is now in the forefront of unclaimed property because of the way the industry is using this new technology and because it seems to evolve on an almost daily basis. There has been a lot of confusion and disagreement about this subject, because different constituencies have different needs, but this kind of vetting of any “new” property type is to be expected as part of an updated act.
- American Bar Association: This is one of the advocacy entities that has been highly involved in the creation of the revised act. A representative of the ABA was on the panel at the UPPO annual meeting. The ABA sees the new act as an improvement over the 1995 act overall, but there are still some serious issues important to the ABA, including:
- Statute of limitations: The law should encourage timely reporting and auditing. In addition to benefitting holders, this would help property owners by getting their property back to them sooner, which is the intent of the law.
- In the matter of liquidating unclaimed securities, the ABA likes that the new act contains three extra years of protection for the owner. The RUUPA says that the state has to “make the owner whole.” On the other hand, the act may not go far enough to resolve potential constitutional issues, such as the fact that some assessments may amount to an unconstitutional taking. An owner should be in as good a position after escheatment as they would have been if their property had not been escheated.
- Foreign property is still escheatable under the new unclaimed property act, but there are constitutional questions related to this type of escheatment, such as due process issues and potential conflict with foreign laws.
- Anti-limitation provisions: This involves the state taking money the owner doesn’t have a contractual right to. For example, when a contract says the owner’s right to reimbursement ends after a certain amount of time or after failure to comply with the terms of the contract, the act still allows states to require escheatment of the money. These rules conflict with rules promulgated by the Supreme Court.
The UPPO session contained many more insights into the development of the RUUPA, and more can be seen in comments at the ULC website. The next step is ratification of the current draft by the ULC, which is expected sometime in 2017. After that, it remains to be seen whether the states adopt all or parts of the act, which likely will take many years as the normal legislative process is followed in each jurisdiction.