Keane's Unclaimed Property Blog

Winter 2010: State Unclaimed Property Laws, Dormancy Periods, & Reporting Legislative / Regulatory Updates

WINTER 2011 (Current through 12/13/10)

Legislative Update Key

Introduced – used for Legislation
Passed – used for Legislation
Proposed – used for Regulations
Adopted –used for Regulations
Prefiled – drafted bills and resolutions to be numbered, printed, made available for public review, and scheduled for hearing before the actual start of session.

Gift Card Escheatment Regulations

CALIFORNIA GIFT CARD ESCHEATMENT
SB 885

Introduced 1/19/2010, Passed 8/25/2010, Vetoed by Governor 9/24/2010
This bill would require that a gift certificate with a cash value of less than $10 be redeemable in cash for its cash value, and would require that a gift certificate contain a statement to that effect. This bill would also delete the exceptions to the prohibition on the sale of a gift certificate that contains a dormancy fee.

NEW JERSEY GIFT CARD ESCHEATMENT

HB 3330
Introduced 10/7/2010
This bill provides that gift cards and gift certificates be redeemable at full face value in perpetuity. The bill also creates a separate category of “store gift card” which is a gift card that is redeemable at a single retail mercantile establishment or an affiliated group of retail mercantile establishments that share the same name, mark or logo. As to stored gift cards, the bill requires a retail mercantile establishment, at which a stored gift card is redeemable, to: (1) upon request, disclose to the consumer the remaining value of the stored gift card; and (2) permit a transaction in an amount that is less than the remaining value of the stored gift card.

HB 3315
Introduced 10/7/2010
This bill makes it an unlawful practice for a retail mercantile establishment to advertise merchandise for sale indicating the availability of a rebate that is to be redeemable as a gift card, gift certificate, prepaid bank card, or stored gift card without disclosing that the rebate is available only as a gift card, gift certificate prepaid bank card, or stored gift card. These disclosures must be made by retail mercantile establishments in advertisements of the rebate and at the time of sale.

SB 2407
Introduced 11/8/2010
This bill exempts stored value cards usable solely for telephone services from State’s escheatment processes.

State Dormancy Periods Legislation

MICHIGAN DORMANCY PERIODS
HB 6421

Introduced 9/8/2010, Passed House 9/16/2010, Passed Senate 9/23/2010, Signed by Governor 10/5/2010
This bill reduces dormancy periods as follows:

1. General dormancy period from 5 years to 3 years
2. Money orders from 7 years to 3 years
3. Any sum payable on a check, draft, or similar instrument from 5 years to 3 years
4. Any demand, savings, matured time deposit or funds paid toward the purchase of a share, a mutual investment certificate, or any other interest in a banking or financial organization from 5 years to 3 years
5. Trust accounts and accounts under the gifts to minors act from 15 years to 3 years
6. Funds owed under any life or endowment insurance policy from 5 years to 3 years
7. Gift cards from 5 years to 3 years

Starting in 2011, the report shall be filed on or before July 1 for the 9-month period ending on March 21, 2011. For years ending after December 31, 2011, the report shall be filed on or before July 1 of each year for the 12-month period ending on the immediately preceding March 31.

MISSOURI DORMANCY PERIODS
HB 64

Introduced 12/7/2010
This bill proposes to reduce the dormancy period for payroll checks from 5 years to 1 year beginning January 1, 2012.

NEW JERSEY DORMANCY PERIODS
NJ 3250

Introduced 9/20/2010
This bill proposes to reverse the changes to the unclaimed property law just recently enacted with the passage of A3002. A 3250 proposes to do the following:

1. Restore the dormancy period for travelers checks to 15 years (from 3 years)
2. Restore the dormancy period for money orders to 7 years (from 3 years)
3. Restore the previous statutory standard of unconscionability for limiting service charges on travelers checks
4. Restore the statutory standard of unconscionability for limiting fees associated with a failure to redeem a credit balance, customer overpayment, security deposit, refund, credit memorandum, unused ticket, and similar instruments
5. Eliminate the State’s claim on unused stored value cards (i.e. return stored value cards to exempt status)
6. Eliminate A3002’s requirement that businesses gather contact information from customers buying gift cards.

Lastly, the bill grants the State Treasurer emergency regulatory authority to implement the proposed changes and to reimburse issuers that reported unclaimed property under the recent 2010 changes, which otherwise would not have been due as reportable.

Unclaimed Property Audit Regulations

NEVADA UNCLAIMED PROPERTY AUDIT
NV 5137

Proposed 8/17/2010
Nevada has proposed a regulation relating to unclaimed property establishing requirements relating to the selection of persons to be audited by the Administrator of Unclaimed Property. Five percent of audits would be conducted at random. The other 95% of audits would be conducted based upon an objective method established by the Administrator using common risk factors and other weighted criteria deemed useful by the Administrator. The details of the objective method shall be confidential.

Unclaimed Property Reporting Laws

TENNESSEE UNCLAIMED PROPERTY REPORTING
TN 1700-02-01.01, .04, .05, .38
Proposed 9/30/2010
On September 30, 2010, the Tennessee Unclaimed Property Department proposed amendments to the administrative rules regarding reporting of unclaimed property. The primary changes include:
(1) 1700-02-01-.01 Organizations and Individuals Required to Report. Currently, this rule states that businesses employing less than twenty-five (25) employees do not have to file unclaimed property reports with the State. This rule conflicts with the Unclaimed Property Act in that the Act applies to all businesses regardless of the number of employees they employ. The proposed rule would delete the exception to make it consistent with the Act.

(2) 1700-02-01-.04 Reporting Forms. Currently, this rule requires unclaimed property holders to file their unclaimed property reports with the State Treasurer on electronic media as prescribed by the Treasurer if the report will contain twenty (20) or more unclaimed property owner records. If the report will contain less than twenty (20) unclaimed property owner records, the respective holder has the option of filing the report in paper form or in electronic media. This proposed rule would require unclaimed property reports to be filed on electronic media as prescribed by the Treasurer regardless of the number of unclaimed property owner records that will be on the report. The proposed rule would give the Treasurer the authority to waive this requirement with respect to any holder if it would be too costly or oppressive. In which case, the holder would file the report in paper form, or in such other alternate electronic media as the Treasurer deems acceptable.

(3) 1700-02-01-.05 Alternative Reporting Forms Accepted by the State Treasurer. Currently, this rule provides that a holder of unclaimed property may file an unclaimed property report in such other alternate electronic media as the Treasurer deems acceptable upon prior written approval of the Treasurer. This rule would no longer be needed since it would be addressed in the above proposed rule amendment and, therefore, it is proposed that this rule be deleted.

4) 1700-02-01-.38 Agreements Relative to Unreported Property. This proposed rule would delete an outdated Internet web site for obtaining information about Tennessee’s unclaimed property program. Proposed effective date is 2/28/11.

TEXAS UNCLAIMED PROPERTY REPORTING
TX TAC 55.142

Proposed 8/20/2010, Adopted 10/8/2010, Effective 10/11/2010
The proposed section outlines Child Support Division policy for reporting of child support payments held for disbursement as unclaimed property in Texas. Child support payments being held for disbursement by the state disbursement unit or a local registry may be reported as unclaimed property as outlined in the Texas Property Code. If the location of the person to whom the money is owed is unknown, the Title IV-D agency will conduct periodic attempts to locate the owner of the payments. If, after three years from the date the child support payments have been held, there has been no contact by the property owner and attempts to locate the owner have failed, the child support payments may be reported as unclaimed property. If locate information is present at the end of a reporting period, the reporting of the unclaimed payments may be deferred to the next reporting period.

WASHINGTON UNCLAIMED PROPERTY REPORTING
WAC 208-680

Proposed 8/18/2010
The Escrow Agent Registration Act. This regulation, among other things, outlines the obligations of trust officers concerning unclaimed funds in their accounts. The regulation requires trust officers to conduct quarterly examinations of their accounts in order to locate unclaimed funds.

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