FREQUENTLY ASKED QUESTIONS ABOUT OUR ESCHEAT TRACKING SYSTEMS

Below are frequently asked questions about our proprietary escheat tracking systems.

Q. Why do you track the items for escheat?

The state laws vary with respect to escheat and particularly for prepaid instruments and cards. Some items or cards do not escheat under the state laws. These non-escheated items are retained by the escheat holder and may be eligible for revenue generating events. Explore our revenue recognition services.

Therefore, proper escheat classification of each item or card is important. Proper classification depends upon the timing and nature of the transactions using the item or card. Our escheat tracking systems track the transactions and state laws and classify the escheat status of each item.

Q. Can you provide more detail on your escheat tracking systems?

Our proprietary processing systems process transaction data for program on a per item or card basis to determine and track the escheat status of each item.

The systems first determine which State’s law applies along with the applicable historical version of the state’s statute. Upon selecting the applicable historical state law, the systems processes 35 or more attributes of the law to manage the item with respect to escheat.

The systems then determines whether the item is slated to escheat or will be exempt under the applicable state’s law.

Items slated not to escheat are identified, filtered and made available for revenue recognition including application of derecognition techniques. Explore our derecognition revenue services.

Items slated to escheat are processed to calculate the timing and amount of escheat. They are tracked over time until they reach the point of due diligence notices and/or state escheat reporting.

The systems identify the Items that have aged to the point of requiring due diligence notices and produce the metrics required for notice making. They also identify the items ready for state reporting and produce the metrics required for state reports.

Depending upon client preference, we complete and send the due diligence notices or support the client in doing so. Similarly, we complete the state reports or support the client in doing so.

The systems create an audit trail recording the escheat decisions for future use in statue inquiries and audits. And, they retain data and records for required regulatory periods of time.

Q. You mentioned the timing of escheat. How does that work?

Under the escheat statues, the escheat holders are required to escheat each item that has aged to the point of becoming “presumed abandoned.” The laws typically define that period of time as being a specified time period following a specified triggering event. For example, in some states, gift cards are presumed abandoned five years after their last use. In that case five years is the period and trigger is the last use. Escheat timing is the process of applying these applicable statutory time periods in accordance with the applicable laws.

Q. Do the escheat time periods vary?

Yes. They are heavily variable. They vary per state, per historical versions within a state, and for different types of instruments or cards.

Q. Do your escheat tracking systems manage escheat timing?

Yes. For each item, the systems select the applicable state along with the applicable historical version of its escheat laws. They then identify the statutory escheat time period for each item along with the statutory trigger point for starting the escheat clock. They apply these metrics to each item to calculate the timing of escheat per item. The systems also automatically retrigger the clock upon consumer generated activity thereby restarting the statutory time period.

Q. You mentioned retriggering the escheat clock. What is that?

A consumer’s use or activity on an item or card indicates that the instrument is not being abandoned by the owner – because the use is inconsistent with abandonment. Therefore, some escheat laws allow escheat holders to restart the escheat time period upon the occurrence of such consumer activity. We refer to that process as retriggering because the escheat timing is reset and started anew.

Q. Do your escheat tracking systems manage escheat retriggering?

Yes. The state laws on retriggering vary and mandate requirements for its proper application. Our processing systems apply these laws to automatically retrigger the escheat time periods upon qualified activity by the consumers. Our systems are robust including retriggering upon card loads, card redemptions, balance inquiries, and responses to due diligence notices. They also apply contemporaneous record requirements by acting upon contemporaneously recorded actions of the consumer.

Q. Is there any value created in processing escheat retriggering?

Yes. The retriggering extends the time period for escheat. The extended period may have positive economic effects. The escheat holder retains its cash longer. Float on pooled accounts is extended. Additional time is created for back-end fees. Occasionally, added time allows for use of the instrument by the consumer.

Q. You mentioned the tracking the amount of escheat. How does that work?

Each escheat statute specifies the amount which must be escheated for a particular item. Sometimes that amount is the balance of the item. In other cases it might be the price paid for or face value of the item. And exemptions or deductions also may apply reducing the escheated amount.

Q. Do the laws on escheat amounts vary?

Yes. They are heavily variable. They vary per state, per historical versions within a state, and for different types of instruments or cards.

Q. Do your escheat tracking systems track and manage escheat amounts?

Yes. The systems first select the correct State along with the applicable historical version of its laws. They then apply the State’s rules to the transactions to calculate the escheat amount. In doing so, they apply available exemptions and deductions reducing the amount subjected to escheat.

The systems then make the amounts retained from exemptions and deductions available for revenue recognition including application of derecognition techniques. Explore our derecognition revenue services.

Q. Can you provide examples of the escheat deductions and exemptions?

Yes. Some state statutes may totally exempt certain items from escheat. Examples are gift cards in Arizona and Virginia. Some require escheat but provide an exempt minimum. For example, gift cards under $200 do not escheat in New Hampshire. Some specify deductions. As examples, Colorado permits the escheat holder to deduct the greater of $25 or 2% of each item; Missouri allows the escheat holder to retain 40% of a gift card balance; and Delaware allows the escheat holder to retain its margin regarding gift cards. Illinois allows the holder to deduct its due diligence notice costs from the escheat payment.

Q. Do the laws on escheat deductions and exemptions vary?

Yes. They are heavily variable. They vary per state, per historical versions within a state, and for different types of instruments or cards.

Q. Do your escheat tracking systems manage escheat deductions and exemptions?

Yes. As explained above, our systems are designed to capture available deductions and exemptions. The retained amounts also are made available for revenue recognition including application of derecognition techniques. Explore our derecognition revenue services.

Q. Is there any value created in capturing escheat deductions and exemptions?

Yes. While the deductions and exemptions may appear to be small amounts per item they add up when applied across a portfolio of thousands to millions of instruments.

Q. How do you manage the complexities of the all the varying rules and other variable?

We designed the computers and our proprietary systems to unravel the complexities on a per item basis.

Q. How do you apply the variables to large volumes of instruments and cards?

We let the computers deal with the volumes.