Unclaimed Property Is Not a Lost Cause

One may see a newspaper ad--such as California’s recent list of 12,261 Los Angeles residents whose unclaimed property was turned over to the state controller last year.

One may get a letter from a private “investigator” demanding a finder’s fee for “discovering” and claiming such assets. One could even see an ad offering instructions on how to earn $250 an hour peddling such “investigations.”

Whichever, people get the idea that some state is holding property that’s rightfully theirs--bank accounts, utility refunds, stocks, wages, even cashiers’ checks. Maybe they’re the original owner’s heirs; maybe they moved or simply forgot their own account.

It’s real. It’s available for the asking. But it’s not always easy to locate, and state governments, despite their apparent efforts, aren’t very efficient in locating the rightful owners.

For a long time, such accounts stayed where they were. “No laws told a company or bank what to do with the money,” says Patty White, director of Colorado’s unclaimed property office (“The Great Colorado Payback”). So “over the years, (they) took over accounts that were inactive,” says Edd Fong, spokesman for the California controller’s office, “using them as income without making a good-faith effort to locate the owners.”

In the 1950s, states began adopting uniform laws giving them custody of unclaimed assets. It was later determined that such property, wherever found, would go to the state of the owner’s last-known address “because that state has the best chance of finding the owner,” says Lorin Nielsen, Utah’s deputy state treasurer and president of the National Assn. of Unclaimed Property Administrators.

But some institutions kept pocketing the money anyway. Indeed, in 1975, Bank of America was sued by California’s state controller for “cannibalizing” inactive accounts. Ostensibly unable to find depositors as notable as Lucille Ball, Willie McCovey and the controller himself, the bank just service-charged such accounts down to nothing.

This past decade, state governments got more active. It looked good to have “something coming back from government,” says White, and “states needed funds and saw a place to get it.”

It’s a nice little windfall. Since the 1950s, they’ve collected $5.8 billion worth of unclaimed property--$1.2 billion of it last year alone. To date, they’ve paid out only $722 million to claimants.

Each sets its own “dormancy” period, after which the property goes to the state. Unclaimed wages usually get the shortest period--a year--perhaps because they’re rarely just forgotten. Savings, stock holdings and other accounts that are normally rather inactive usually aren’t considered abandoned for seven years, although in California, where life and state government operate in the fast lane, it was cut to three years.

Purely custodians, the states only use this money, open to claims in perpetuity. Some lend it to their general fund (California), some to a specific fund--schools, for example (Florida). Many pay interest on some or all of the money when it’s claimed.

Payback programs, while better publicized, are less successful than the collection. In Florida, 30% of the money that comes in is paid out to rightful owners within six months. California pays out about $30 million of the $150 million it collects annually, leaving the state with $950 million now in unclaimed funds.

Most states, like California, advertise the names and addresses attached to property most recently received. Some have hot lines for inquiries. Almost all open their lists to the public, although the information provided varies. Some provide just names and addresses. Others provide everything to everyone, considering it all public record--name, address, Social Security number, amount of money and--in Florida--any named beneficiaries.

Their efforts in tracking down owners or heirs also vary. Some states have locater units that actually do some sleuthing on individual cases. California computer-searches its tax records for more current addresses. Florida--for all its information--only sends letters to the given owner’s addresses.

No wonder there’s a fertile field for so-called heir-finders, particularly those willing to go a step farther. Some states discourage them by limiting their fee (to 10% in California) or their access (Utah permits no second-party filings until a listing is 2 years old), but most gladly sell them the listings.

Services vary, too. Some do real tracking (given some goodly assets) and handle claims. Some buy state lists just to sell people--sometimes via a 900 number--the name and number of the state that has them listed. And somehow they all manage to reach people the state professionals could not.

Obviously, if these services can file such claims, so can potential claimants, and if they know the state involved, they should do so, directly. Similarly, if these services can find and contact potential claimants, so can state officials. And they should do so, better than they do now.