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Unclaimed Property Focus
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UNCLAIMED PROPERTY FOCUS is a blog written by and for UPPO members, featuring diverse perspectives and insights from unclaimed property practitioners across the U.S. and Canada. We welcome your submissions to Unclaimed Property Focus. Please contact Tim Dressen via tim@uppo.org with any questions about submitting a blog post for consideration and refer to our editorial guidelines when writing your blog post. Disclaimer: Information and/or comments to this blog is not intended as a substitute for legal advice on compliance or reporting requirements.

 

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Meet 2018/19 UPPO President Marilyn Henry

Posted By Administration, Thursday, May 10, 2018

When Marilyn Henry volunteered to assist as a room monitor at an unclaimed property conference, she never considered that it was the first of many roles that would lead to her position as 2018/19 UPPO president. At the time, UPPO – under its original name, the Unclaimed Property Holders Liaison Council – was still relatively young. The organization’s educational programs were tacked on to state unclaimed property events and membership was small.

 

“When we started having our own conferences, it was like a family,” she said. “We’d get together once a year, and you knew everybody. We’ve seen a lot of growth since then.” 

 

It wasn’t long before Marilyn’s involvement grew as well. Whether participating as a committee member or leading an annual conference session, UPPO has been an important part of her unclaimed property career, which began more than 20 years ago. 

 

Returning to work at a bank in 1986 after serving the important role of stay at home mom, Marilyn soon moved to a position in accounting, where she was first exposed to unclaimed property. 

 

“It was something that just had to get done,” she said. “I gathered information from different areas, typed people’s names onto the forms using a typewriter and then sent the forms to the states of Connecticut, Massachusetts and New York. That was the beginning, but it eventually led me to the job I have today.”

 

When the bank was acquired by a larger bank in 1995, she moved on to positions without unclaimed property roles at MetraHealth (which later became UnitedHealth Group) and Travelers. In 1999, she returned to UnitedHealth Group and has been handling unclaimed property ever since. 

 

She joined UPHLC in 2000 to learn how other companies were handling their unclaimed property. Her first contact with the organization was with Mike Ryan, who currently serves with Marilyn on the UPPO board. 

 

Marilyn was first elected to the board in 2012 as Eastern vice president with a reelection in 2014. In 2016, she was elected second vice president, moving into the first vice president role last year and subsequently her position as 2018/19 president. 

 

Unclaimed property continues to be a rewarding career, especially when reuniting people with money they really need.

 

“Sometimes people don’t realize they have any money coming to them,” she said. “And they really need it. Because we administer health claims, a lot of those checks often go uncashed when the member is really ill. When an heir comes forward who had to spend a lot of money on medical care, knowing they will be reimbursed for some of that money is really rewarding.”

 

Today, as she serves as UPPO president, unclaimed property professionals face some big issues, including third-party audits, ever-changing state laws and inconsistencies in reporting requirements from state to state. Despite efforts through the Revised Uniform Unclaimed Property Act to bring about more consistency, states have been adopting the act piecemeal, so UPPO’s work to promote fair and balanced statutes continues to be essential. 

 

One of UPPO’s projects occurring during Marilyn’s term is refinement of UPPO’s advocacy work and expansion of a grass-roots member network, getting more people involved to make a greater impact. She is also excited about the upcoming expansion of the organization’s certificate program this summer.

 

When Marilyn isn’t focusing on unclaimed property, you’re likely to find her outdoors. She enjoys spending time riding her John Deere tractor and four-wheel ATV. 

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The Ins and Outs of Electronic Due Diligence with Customers

Posted By Contribution from Heather Steffans, 2018/19 UPPO second vice president, Thursday, May 3, 2018

Due diligence plays such an essential role in the unclaimed property process that all U.S. jurisdictions require some form of pre-report communication effort by property holders. The objective is to find rightful owners and return property that has remained dormant rather than escheating it to the state. By making an effort to return property, due diligence can also improve relations between holders and those with whom they do business. 

 

Typically, due diligence is conducted by U.S. mail. However, in this digital age, that may not be the preferred method of communication between businesses and their customers. Customers often prefer to be contacted electronically and, as businesses continually seek to automate and operate more efficiently, more of them push customers from the onset of the relationship to choose paperless options. Some even incentivize such choices by offering customers a gift card or discount for choosing to go paperless.

 

Challenges

Conducting due diligence electronically can be more efficient and cost-effective. However, doing so also carries numerous challenges. Among the hurdles for implementing electronic due diligence practices are internal corporate policies. Most organizations have policies regarding what information can and cannot be communicated electronically due to privacy and security concerns. For example, including Social Security numbers, credit card numbers, gift card numbers or any personally identifiable information increases risk. If that information is inadvertently delivered to the wrong address, it could cause undue harm to the property owner. 

 

With the limited amount of information provided via email, such efforts often produce higher call volumes from customers requesting additional information and verifying that the emails aren’t fraudulent. In addition to having the ability to field the additional calls, holders need to ensure reconciliation efforts are in place to avoid double payment if a recipient responds to both an electronic and a hard copy due diligence notice. 

 

Other challenges come from the process of gathering and managing email addresses. If a holder has access to email addresses, processes are necessary to properly deal with those that are invalid, producing “bounces.” In addition, owners need to have an easy way to opt in and out of email communication, which is generally a legal requirement for conducting business electronically. 

 

Sending bulk email increases companies’ risk of having their email servers blacklisted, resulting in decreased deliverability of future emails. If you regularly send bulk email to 20, 50, 100 or more people at a time, use a bulk email service to avoid having internet service providers viewing your servers as sources of spam and filtering your emails. 

 

Sending email internationally leads to even more challenges, including language/translation issues, cultural norms and foreign legal requirements. For example, European Union anti-spam legislation strictly prohibits email considered direct marketing to anyone who hasn’t given prior consent. 

 

Best Practices

Companies use a variety of methods to allow for effective electronic communication with property owners. Some require an affirmative response to communicate electronically. Others use a negative consent letter, which specifies that a prospective participant's failure to either agree to or decline an invitation to participate is considered an opt-in.  

 

Automated Voice Response or Interactive Voice Response technology helps businesses automate common customer interactions while capturing customer responses that can be stored and documented, after ensuring that responses have gone through the proper authentication process.

 

Disparate data warehousing can often be a source of unclaimed property, so reviewing each area or department is important. Establish policies and procedures with authorized representatives to contact customers every 180 days, and with human resources departments, to seek acknowledgement annually at tax time. 

 

Capture owner contact information and consent to be contacted electronically in conjunction with tax forms, statements, buck slips, website popups and other points of contact. Document such contact to ensure backup is available if audited.

 

The best defense is a good offense. When setting up an electronic owner outreach program, it’s important to understand what information is necessary to capture and to review it for accuracy at the onset. Did you capture the correct email address? Do you have a secondary email address? Have you received permission to send correspondence electronically? What kind of frequency do you have set up for sending electronic correspondence if customers have not logged into their account after a specified period of time? What happens if they opt out? What happens if the email is rejected or bounced? How are you storing the responses? Are you directing them to a central repository or individual systems? Who is tracking responses? Is a toll-free phone number available for questions? How is that being staffed? 

 

After collecting owner information, such as emails and cell phone numbers, document electronic communication opt-in and opt-out dates, email bounces and other pertinent details reflecting contact. The key is to substantiate the contact as much as possible, whether it’s through IVR, phone records, logins with credentials, etc. 

 

Research from Experian shows that 79 percent to 83 percent of consumers check their email on their smartphone or tablets. If you don’t have your emails, including electronic due diligence, in a mobile-friendly format, recipients may not take the time to scroll to see the entire email. The average smartphone shows only 25-30 characters, so keep your sentences short and to the point with headlines and subheadings so the information can be easily scanned. 

 

Enhancing traditional due diligence measures with electronic due diligence practices can provide a lot of advantages for holders. However, to fully enjoy these benefits, holders need to ensure they implement electronic efforts with care. As with any aspect of unclaimed property compliance, state statutes dictate many holder activities, so consult with applicable statutes when determining where electronic communications best fits within your company’s outreach efforts.

Tags:  due diligence 

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UPPO Advocacy Update: April 2018

Posted By Administration, Thursday, April 26, 2018

 

To help members remain aware of UPPO’s advocacy activities, the Unclaimed Property Focus blog will now include a monthly Advocacy Update when state legislatures are active. Following are recent activities and trends from UPPO’s Government Relations and Advocacy Committee (GRAC).

 

Top Priority Issues

To continue refining and improving the organization’s advocacy work, GRAC recently established its top five priority issues. This list was developed using results from a membership-wide survey. Responding to the needs and desires of members, GRAC refined and prioritized the survey results. Establishing these priorities will help UPPO take a strategic, focused approach to important issues affecting unclaimed property holders. The priorities are:

  1. Record retention, statutes of limitations and use of estimation.
  2. Rules for taking custody of abandoned property and foreign property. 
  3. B2B exemptions.
  4. Derivative Rights Doctrine.
  5. Presumed abandonment of securities.

We will provide more details regarding UPPO’s work on each of these issues in future blog posts.

 

California VDA Program

UPPO recently signed on as a sponsor of California A.B. 2773, a bill to establish a voluntary disclosure program in the state. The California State Controller’s Office has since expressed some concerns with the bill’s language, leading Assemblyman Dante Acosta, the bill’s author, to pull the bill from consideration. 

 

UPPO intends to work closely with Acosta and the Controller’s Office to address these concerns with the goal of the bill’s reintroduction during the next legislative session.

 

Custody of Escheat Trend

Recent legislation in three states indicates a potential trend related to limits on property owners’ ability to claim funds that have been escheated. 

  • Hawaii S.B. 2921 specifies that claims would be invalid for funds totaling less than $250 and filed more than 10 years after the funds were deposited into the state’s unclaimed property trust fund. This is a change from the current amount of less than $100. The bill is expected to pass soon. 
  • Arizona S.B. 1097 limits unclaimed property claims to 35 years after the final day of the fiscal year in which the state receives the unclaimed property. The governor signed this bill into law on March 23, 2018.
  • Louisiana H.B. 851 limits unclaimed property claims to 30 years from the date the state receives the property. The state treasurer is reportedly opposing the bill, as he was not consulted about it. 

UPPO will continue to monitor this issue and report on developments as warranted. UPPO members can track the progress of these bills and all active unclaimed property legislation nationwide via our govWATCH service.

 

 

As more and more legislatures and regulatory agencies take on issues affecting unclaimed property compliance, advocacy has become an increasingly important role for UPPO.

Please take a few minutes to complete our 
Government Relations and Advocacy Survey to help us build our grassroots network. Responses will give us the ability to mobilize UPPO members when we are faced with legislative and regulatory challenges and opportunities.

 

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The Four Phases of Delaware’s VDA Program

Posted By Administration, Thursday, April 19, 2018

As part of recent changes to Delaware’s unclaimed property statute, the state must give holders the opportunity to enter into its voluntary disclosure agreement (VDA) program before initiating audits. In addition, holders that were already under examination had the option to convert to a VDA by Dec. 11, 2017. Expectedly, interest in Delaware’s VDA process is high. 

 

To provide UPPO members with insight into Delaware’s VDA process, Delaware Unclaimed Property VDA Administrator Alison Iavarone outlined the program and responded to questions during a recent UPPO webinar. 

 

“The VDA program is not an examination—it’s not an audit—but the holder is expected to conduct a comprehensive and detailed self-review of its books and records to determine whether the holder has past-due abandoned or unclaimed property reportable to Delaware,” she said.

 

Once enrolled, qualified unclaimed property holders accepted into Delaware’s VDA program will proceed through a four-phase process.

 

Phase 1: Scoping

During the initial phase of the VDA, the participating holder analyzes its organizational history, accounting functions and records to determine areas of potential unclaimed property exposure and underreporting. 

 

“The review should be customized to the holder,” Iavarone said. “In order to determine how it’s customized, you need to understand the corporate activity, whether companies were acquired during the VDA review period and how they were rolled into the company for accounting purposes, for example. Another big thing to address during the scoping phase is the compliance history—whether they have been filing and what property types they have been filing. This could help minimize the review you need to do.”

 

The holder determines the entities and property types where unclaimed property exposure exists and submits a Scoping Worksheet and Information Request to the VDA administrator assigned by the secretary of state’s office—either Drinker Biddle or TL2Q. 

 

The administrator reviews the holder’s submission and responds to any questions the holder may have about the process. The Delaware Department of State communicates with the administrator throughout the VDA process and remains available to address holder concerns. 

 

At the conclusion of this phase, the administrator and holder will agree on the scope of the VDA and establish a timeline for completion of the other phases. 

 

Phase 2: Quantification

During the second phase, the holder will review its books and records to quantify past-due unclaimed property reportable to Delaware for the entities and property types established during the scoping phase. The methodology for the quantification of amounts due to Delaware will generally be based on whether an entity is domiciled in Delaware and the records availability for each entity and property type. 

 

The holder and administrator periodically complete status updates to ensure the process is proceeding. The holder provides preliminary quantification schedules or other documentation for the administrator’s review and feedback. 

 

Phase 3: Submission and Validation

During the third phase, the administrator reviews the holder’s work and conclusions with the goal of establishing a settlement agreement, including the amount reportable to Delaware. The holder presents its VDA Submission to the administrator. It should include:

  • Entity or company background information (in narrative form). 
  •  Summary of the work performed (in narrative form). 
  •  Summary of findings (in narrative form). 
  •  Supporting schedules. 
  •  Supporting documents. 
  •  Other applicable documentation (e.g., legal opinions, management representation letters, etc.).

“This is the nuts and bolts of the VDA,” Iavarone said. “It should include is a summary of what was done in narrative form and then quantification schedules summarizing how you came up with the numbers, along with supporting documentation.” 

 

Upon receipt and review, the administrator responds with questions and follow-up items needed to proceed. Depending on the request, the holder may respond with supporting documentation and/or edits and updates to calculation spreadsheets. The holder also provides a management representation letter from its chief financial officer, describing what records are available for property types and for which years. 

 

The administrator presents the VDA Submission to the secretary of state’s office for review and approval. The Department of State reviews the VDA Submission and the administrator’s recommendations.

 

Phase 4: Closing and Documentation

Upon acceptance of the VDA Submission, the holder and secretary of state’s office work together to close the VDA. An officer or authorized representative completes and submits Form VDA-2 – Voluntary Self-Disclosure Agreement, along with several attachments:

  • Exhibit A: List of Entities: This attachment includes a list of entities include in the VDA and their federal identification numbers. Dates and states of incorporation are also requested but not required.
  • Exhibit B.1: Summary of Amounts Due: This attachment includes a table summarizing reportable amounts by property type. 
  • Exhibit B.2: Line Item Owner: This attachment, provided in a printable format should include the name, address, property type and amount that will be included in the NAUPA file that will be uploaded by the holder after receiving the VDA Demand Letter. 
  • Exhibit C: SOS VDA Submission: This attachment may consist of many documents and should include: the narrative summarizing the VDA analysis; a summary and detailed schedules quantifying amounts; copy of VDA-1 and any applicable amendments; management representation/records availability letter; legal opinions/memoranda related to the VDA; and any other relevant documents. 

After the holder and secretary of state have signed Form VDA-2, the Department of State will issue a Demand Letter, requesting payment and providing instructions for uploading the necessary NAUPA file. The holder will have 10 days to make payment of the amount due. 

 

Following completion of the VDA process, the holder is required to file unclaimed property reports electronically to the Department of Finance for the next three years. 

 

For additional information regarding Delaware’s VDA program, including forms, sample documents and answers to frequently asked questions, visit http://vda.delaware.gov.

Tags:  Delaware  VDAs  voluntary disclosure agreements 

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California Legislature Considers Voluntary Disclosure Program

Posted By Administration, Thursday, April 5, 2018

A.B. 2773, a bill under consideration by the California Assembly, would establish a voluntary disclosure program in the state. If passed, the statute would require the state controller to create a program following several requirements similar to those in other state voluntary disclosure programs. They include:

  • The program would be open to holders out of compliance with applicable unclaimed property reporting deadlines if they are not already under audit when applying to participate.
  • Participating holders would be expected to review their records and report obligations to the state for the previous 10 years. 
  • The controller would waive interest and penalty charges for holders completing the program in good faith and coming into compliance.
  • The holder would not be subject to audit for the period covered by the voluntary disclosure agreement (VDA) unless the controller reasonably determines the holder has made a fraudulent or willful misrepresentation. 
  • Payment to the state for outstanding liabilities would occur within 12 months from the VDA filing date or another date determined by the controller. 

If adopted, the program would begin on Jan. 1, 2019, and would remain in effect until Jan. 1, 2024, unless extended by statute. 

 

On March 15, 2018, UPPO notified bill author Assemblyman Dante Acosta of its support for the bill and availability to provide expert testimony or other assistance regarding the legislation and its subsequent implementation. 

 

A.B. 2773 is scheduled for an April 10 hearing by the assembly’s judiciary committee. UPPO members can track the progress of this bill and all active unclaimed property legislation nationwide via our govWATCH service

Tags:  California  legislation  VDAs  voluntary disclosure agreements 

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