UNDERSTANDING UNCLAIMED PROPERTY & ESCHEAT

Issuers of payment instruments typically record liabilities on balance sheets to reflect the instruments. On occasion, these liabilities remain unused and become stale or abandoned. Stale liabilities are classified in accounting parlance as “unexercised customer rights” and are commonly known as “breakage.”

Breakage is subject to regulation by unclaimed property and escheat laws. In the United States, these laws are set by States or Territories. These laws require certain abandoned liabilities to be escheated and paid to the State. But, the laws also have exceptions, exclusions, and deductions under which breakage is not subjected to escheat.

Card Compliant is a leading provider of escheat compliance services for payment instrument industry, and prepaid card programs, and our services are supported by our proprietary compliance systems.