FREQUENTLY ASKED QUESTIONS ABOUT OUR APPLICATION OF THE ESCHEAT VARIABLES
Below are frequently asked questions about the variables impacting the application of escheat along with our systems for managing these variables.
Q. You mention that there are variables that impact escheat. What are the variables?
Many variables affect decisions regarding escheat. The state laws themselves vary. Attributes of the parties to the instruments vary. Features of the programs vary. And facts per instrument vary. Varying laws, varying party attributes, varying program features, and varying card specific facts directly impact the application of escheat to a specific item.
Q. Can you summarize the variability of the state laws governing escheat?
Yes. The state laws are heavily variable. They vary with respect to the items to be escheated, escheat timing, presumed abandonment periods, escheat timing triggers, retriggering, escheat amounts, exemptions, deductions, state fiscal years, state escheat years, escheat notice requirements, escheat notice types, escheat notice timing, escheat notice content, escheat notice timing, state report deadlines, state report content, filing methods, and payment methods. They even vary with respect to the escheat priority rules used to select which state’s laws apply. And varying micro rules also apply.
Q. Do your systems address the variability in the state law?
Yes.
Q. Can you summarize the varying party attributes that impact escheat?
Yes. Under unclaimed property laws, payment instruments and cards are considered items of intangible property consisting of a contract between the instrument issuer and instrument owner. Attributes of these two parties impact the application the escheat priority rules to determine which state’s escheat laws apply.
The variables in applying the escheat priority rules include the anonymity of the instrument owner, the residence of the instrument owner, the business type of the instrument issuer, the business domicile of the instrument issuer, and the state where the transaction giving rise to the instrument occurred. Changes in these variables may cause wide swings in escheat for a portfolio.
Q. Do your systems address the variability in the party attributes?
Yes.
Q. Can you summarize the varying program features that impact escheat?
Yes. Escheat may vary depending upon the type of escheat holder, the type of instrument, the type of program loop, whether the instrument purchaser is a business or consumer, the use of expiration dates, the use of back-end fees, and the use of cash back. Changes in these variables can cause wide swings in escheat for a portfolio.
Q. Do your systems address the variability in the program features?
Yes.
Q. Can you summarize the varying card specific facts that impact escheat?
Yes. Escheat may vary depending upon the place of purchase of an item, the date of purchase, the amount of purchase, the instrument balance, the face value of the item, the consideration paid, the lack of consideration, the nature of consideration provided, the date of last use, and the presence or absence of retriggering events. Changes in these variables can cause wide swings in escheat for specific items. For example, two gift cards from the same gift card program can be sold within minutes by the same retailer at the same point of sale and result in one card escheating and one not.
Q. Do your systems address the variability in card-specific facts?
Yes.
Q. What are the compliance challenges in addressing the variability?
Depending upon the program, compliance officers are faced with a complex matrix of variables in attempting to comply with escheat laws. The analysis is very difficult without computer assistance, particularly in programs with large volumes of instruments. For example, adding an expiration date to a gift card can cause the card to switch form non-escheat to escheat in North Carolina while switching from non-escheat to escheat in Idaho.
Q. How do you manage the complexities of the variables?
We developed our proprietary systems to address each category of variables including varying laws, party attributes, program features, and card specific facts. We let these systems unravel the complexities on a per item basis.
Q. How do you apply the notice variables to large volumes of instruments and cards?
We developed our proprietary systems to address large volumes of instruments. We let those systems deal with the volumes.
