Menu

KeepUP™ Blog

11/21/17 10:34 AM

Will The Advanced Digital Age Impact The Future Of Unclaimed Property Compliance?

by Benjamin Bell

Human hand pointing with finger at money sign.jpegThe current talk surrounding escheat compliance is either about RUUPA or Delaware reform.  Let’s take a quick break from that and imagine the unclaimed property landscape and what it may look like the next time the ULC gets together, by  focusing on a few common unclaimed property categories: checks, securities, and gift cards.  The laws have always adapted to the way commerce operates so we will explore each category and their trends before we take a shot at predicting the future.

Checks

Checks are still being issued today but are far less common than when the Unclaimed Property Act of 1995 was written. If you ask a millennial the last time they have written a check versus using PayPal, Venmo, or some other form of electronic payment you may be shocked when they say they don’t even have a checkbook.  Businesses are heading the same way.  Business transactions and even the government (who seem to lag 20 years behind) are moving towards electronic payments.  So, we can only assume that checks will be as prevalent as 3½-inch floppy disks in the unclaimed world of the future.

Securities

Securities markets are trading at or near all-time highs and this industry is constantly evolving.  Physical stock certificates are being phased out for book entry shares.  You won’t find these kept in bank branch safe deposit boxes much longer. Will banks even offer safe deposit boxes as they continue downsizing their footprint?

Electronic transfer is here and along with it are online accounts, where logging into them instantaneously allows owners to determine the value of their assets.  A current accurate address on record is still very important in the securities industry but for how much longer?  Imagine a world where we have government issued email addresses and where the USPS becomes obsolete.  In this world, there are no longer items returned from the post office (RPO) triggering dormancy.  The federal government has issued email addresses for everyone with a SSN.  Firms can be assured they have the correct email address for the SSN they have registered on the account.  Most importantly, mobile phone or other device apps can simply send a push notification that the user could click on to login before their account would become dormant.    

Gift Cards

Consumers have a love affair with gift cards especially around holidays and birthdays, but there hasn’t been much thought until recent years as to how to capture buyer/recipient/user contact information.  Consequently, unused balances with no owner information have been reported to the state of incorporation of the company issuing them (for states that require reporting).  This has led to a trend of corporations adapting their gift card structures to mitigate the risk of card balances for an unknown owner becoming reportable.  But what will happen as the gift card industry adapts to the 21st  century?  Do gift cards even have a future? 

If so, it’s likely to be in an electronic not physical form.  The large stands at retail or grocery centers won’t exist once consumers move away from paying for things with plastic and switch to paying via mobile phones.  The use of mobile phones will allow for a linkage to an address, and consumers not losing and/or forgetting about their physical cards, both of which would lead to a significant reduction of unknown owner gift card balances being reported to the states. 

The Future

Life in many ways has been made easier with the increased use and functionality of mobile devices and apps. Their sophistication and wide spread use for daily personal tasks and entertainment, has caused various industries to introduce their own apps to make it easier for consumers to buy or use their services and goods. This has been a benefit to holders as they are often able to capture more personal data from the consumer that is easily updated.

The digital age will continue to have an impact and create change in the way unclaimed property legislative requirements will emerge. Holders will need to adopt and implement new processes much like they are doing now with due diligence requirements. Many states are adopting legislation that requires due diligence notifications be sent via both physical and electronic mail. Many holders may find that managing unclaimed property in the digital age will be easier and more streamlined.

However, there are many unknowns in the future, including when and how much states are willing to embrace and implement change to keep pace with digital progress. States may also consider if too much change will drastically reduce the amount of unclaimed property reported each year and if they are willing to see a loss of funds reported to their state.

Leave us a comment and tell us how you think the digital age will impact escheat compliance.

Topics: Best Practices