The Ins and Outs Of Electronic Due Diligence With Customers

June 19, 2018

Due diligence plays such an essential role in the unclaimed property process that all U.S. jurisdictions require some form of pre-report communication effort by property holders. The objective is to find rightful owners and return property that has remained dormant rather than escheating it to the state. By making an effort to return property, due diligence can also improve relations between holders and those with whom they do business. 

Typically, due diligence is conducted by U.S. mail. However, in this digital age, that may not be the preferred method of communication between businesses and their customers. Customers often prefer to be contacted electronically and, as businesses continually seek to automate and operate more efficiently, more of them push customers from the onset of the relationship to choose paperless options. Some even incentivize such choices by offering customers a gift card or discount for choosing to go paperless. 


Conducting due diligence electronically can be more efficient and cost-effective. However, doing so also carries numerous challenges. Among the hurdles for implementing electronic due diligence practices are internal corporate policies. Most organizations have policies regarding what information can and cannot be communicated electronically due to privacy and security concerns. For example, including Social Security numbers, credit card numbers, gift card numbers or any personally identifiable information increases risk. If that information is inadvertently delivered to the wrong address, it could cause undue harm to the property owner.

With the limited amount of information provided via email, such efforts often produce higher call volumes from customers requesting additional information and verifying that the emails aren’t fraudulent. In addition to having the ability to field the additional calls, holders need to ensure reconciliation efforts are in place to avoid double payment if a recipient responds to both an electronic and a hard copy due diligence notice. 

Other challenges come from the process of gathering and managing email addresses. If a holder has access to email addresses, processes are necessary to properly deal with those that are invalid, producing “bounces.” In addition, owners need to have an easy way to opt in and out of email communication, which is generally a legal requirement for conducting business electronically. 

Sending bulk email increases companies’ risk of having their email servers blacklisted, resulting in decreased deliverability of future emails. If you regularly send bulk email to 20, 50, 100 or more people at a time, use a bulk email service to avoid having internet service providers viewing your servers as sources of spam and filtering your emails. 

Sending email internationally leads to even more challenges, including language/translation issues, cultural norms and foreign legal requirements. For example, European Union anti-spam legislation strictly prohibits email considered direct marketing to anyone who hasn’t given prior consent. 

Best Practices

  • Companies use a variety of methods to allow for effective electronic communication with property owners. Some require an affirmative response to communicate electronically. Others use a negative consent letter, which specifies that a prospective participant’s failure to either agree to or decline an invitation to participate is considered an opt-in.  
  • Automated Voice Response or Interactive Voice Response technology helps businesses automate common customer interactions while capturing customer responses that can be stored and documented, after ensuring that responses have gone through the proper authentication process. 
  • Disparate data warehousing can often be a source of unclaimed property, so reviewing each area or department is important. Establish policies and procedures with authorized representatives to contact customers every 180 days, and with human resources departments, to seek acknowledgement annually at tax time. 
  • Capture owner contact information and consent to be contacted electronically in conjunction with tax forms, statements, buck slips, website popups and other points of contact. Document such contact to ensure backup is available if audited. 
The best defense is a good offense.

When setting up an electronic owner outreach program, it’s important to understand what information is necessary to capture and to review it for accuracy at the onset.

  • Did you capture the correct email address?
  • Do you have a secondary email address?
  • Have you received permission to send correspondence electronically?
  • What kind of frequency do you have set up for sending electronic correspondence if customers have not logged into their account after a specified period of time?
  • What happens if they opt out?
  • What happens if the email is rejected or bounced?
  • How are you storing the responses?
  • Are you directing them to a central repository or individual systems?
  • Who is tracking responses?
  • Is a toll-free phone number available for questions?
  • How is that being staffed?

After collecting owner information, such as emails and cell phone numbers, document electronic communication opt-in and opt-out dates, email bounces and other pertinent details reflecting contact. The key is to substantiate the contact as much as possible, whether it’s through IVR, phone records, logins with credentials, etc. 

Research from Experian shows that 79 percent to 83 percent of consumers check their email on their smartphone or tablets. If you don’t have your emails, including electronic due diligence, in a mobile-friendly format, recipients may not take the time to scroll to see the entire email. The average smartphone shows only 25-30 characters, so keep your sentences short and to the point with headlines and subheadings so the information can be easily scanned. 

Enhancing traditional due diligence measures with electronic due diligence practices can provide a lot of advantages for holders. However, to fully enjoy these benefits, holders need to ensure they implement electronic efforts with care. As with any aspect of unclaimed property compliance, state statutes dictate many holder activities, so consult with applicable statutes when determining where electronic communications best fits within your company’s outreach efforts.

This article originally ran on the UPPO Unclaimed Property Focus blog on May 3, 2018.

Letter Q&A
Have questions about a notice you received?

If you received a letter or an email, please check out our FAQ section to learn more about next steps.

Say Hello
Contact us today to learn how we can help

We offer a customized approach to fit your specific needs.