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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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Unclaimed Property Fraud Hits LinkedIn

Posted By Administration, Thursday, November 1, 2018

Scams involving unclaimed property are nothing new, but the latest attempt at defrauding property owners uses a new tactic – a bogus LinkedIn profile designed to look as though it belongs to a state treasurer.

 

On Oct. 23, 2018, Nebraska State Treasurer Don Stenberg issued a warning that a fake LinkedIn account that appeared to be his had been used to contact unsuspecting recipients about unclaimed property. 

 

“I want Nebraskans to know that this impersonator has been active on LinkedIn and through email, and I am urging Nebraskans to contact my office immediately if they have any concerns or suspicions about notifications they have received claiming to be from the Nebraska State Treasurer’s Office,” Stenberg said.

 

The LinkedIn profile used the name “Don Stanberg” – one letter off from the treasuer’s actual name – and the title “Executive Director at National Association of Unclaimed Property (NAUP) – one letter off from the treasurer’s former position as president of the National Association of Unclaimed Property Administrators (NAUPA). 

 

The biography on the fake account profile was identical to Stenberg’s biography on the treasurer’s website, using the correct spelling of his name and his professional background.

 

The sender’s email address used in that communication was doncop960@gmail.com. Email messages were signed “Hon. Don Stenberg” and were identified as the treasurer’s private email address. All legitimate Nebraska Treasurer’s Office email accounts come from the nebraska.gov domain and end with @nebraska.gov. 

 

Despite the effort put into developing a somewhat convincing LinkedIn profile, the email text should be a tipoff to most recipients that it’s a scam. A Houston resident who received one of the emails was informed he was an heir to $12 million that a deceased client had deposited in a U.S. “Finance House in State of Nevada” that was “now lying DORMANT and UNCLAIMED.” The email was long and awkwardly worded, with poor grammar and confusing sentences.

 

Stenberg encouraged anyone contacted by the impersonator to contact his office with details.

 

Scams directed at individual property owners have sprung up often enough to warrant consumer warnings from several states in recent years. This form of fraud usually entails someone offering to help locate property for a fee or, like the Nebraska incident, promising a substantial (and completely fictional) windfall. Eager consumers either pay for bogus services or provide personal information that gives scammers access to bank accounts. 

 

 

Tags:  fraud  Nebraska  scam  unclaimed property 

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Jury Rules Against Overstock in Qui Tam Lawsuit

Posted By Administration, Thursday, October 25, 2018

On Sept. 20, 2018, a Delaware Superior Court jury ruled in The State of Delaware ex. rel. William Sean French v. Overstock.com Inc. that Overstock.com violated the state’s False Claims and Reporting Act by failing to escheat unredeemed gift card balances as unclaimed property. 

 

At issue in the lawsuit was Overstock’s relationship with Card Compliant LLC (previously CardFact), a third-party Ohio-based company used to issue gift cards and assume certain gift card responsibilities. The case came about when a former Card Compliant employee filed a qui tam(whistleblower) lawsuit, alleging fraud against the government. Dozens of other defendants were dismissed from the lawsuit or settled, leaving Overstock as the only defendant.  

 

Among the various allegations, the plaintiffs claim that some defendants didn’t account for the transfer of liability in the manner its contracts specified. According to the state, the liability wasn’t truly transferred and, thus, defendants had the obligation to remit unclaimed property to Delaware but didn’t do so.

 

“It’s unusual in this line of business to have a jury verdict,” said Diann Smith, counsel with McDermott Will & Emery LLP. “Usually we get an opinion from the judge that will provide the facts and explain how the law applies to those facts, but that’s not the case with a jury verdict. We don’t really know why they came to this conclusion, leaving some mystery about what it means for other holders.”

 

Although the decision against Overstock has no precedential value, it certainly could have a ripple effect, encouraging Delaware to pursue similar actions against other retailers who use the giftco structure to shift unclaimed property liability. 

 

“Given this verdict, one would expect that Delaware will continue to take the position that the CardFact structure, as least in its current form, doesn’t work,” said Ethan Millar, partner with Alston & Bird LLP. “Although jury verdicts have no precedential value, it is also possible Delaware may use the verdict as an excuse to become more aggressive about challenging other types of gift card structures.”

 

This decision should encourage other companies with third-party giftco arrangements to review their practices to ensure the structures have substance and avoid the issues alleged by the whistleblower and Delaware. 

 

“Holders should consider carefully not just what was at issue in this case but also how it was brought – as a qui tam action, “Smith said. “They should think about what their compliance positions are and whether they are at risk for this type of action. The Delaware decision could raise the profile for people who are inclined to bring this type of action, and you want to avoid being a target.” 

 

Because whistleblowers receive a portion of the settlement/recovery for actions they bring, the incentive to report a former employer, for example, is high. A lawsuit that results in a multi-million dollar decision or settlement can provide a life-changing windfall for the whistleblower. 

 

One complaint that Delaware had in this case was that companies didn’t reach out to the state to ask whether the structure was valid. That raises the question whether companies with ambiguous issues related to their escheat practices, such as giftcos, should consult with the states. 

 

“In the Overstock case, Delaware argued that Overstock should have asked the state for guidance regarding the structure.  Technically, of course, there is no requirement to do so,” Millar said. “Consulting with counsel should be sufficient. Nonetheless, it would be helpful to understand what Delaware believes is necessary for a gift card structure to be effective. Accordingly, there could be something to gain from dialogue with the states on this and other issues.”

 

Even if the state’s response doesn’t affirm a specific practice, documenting the interaction and demonstrating that the state’s response wasn’t backed by a compelling argument or specific reasoning could prove useful if a dispute arises later. 

 

If Overstock appeals or if this decision leads to further action by Delaware, UPPO will continue to monitor and report on any noteworthy developments.  

Tags:  card compliant  Delaware  litigation  overstock  qui tam  unclaimed property 

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UPPO Scholarship Offers Opportunities, Makes a Difference

Posted By Administration, Thursday, October 18, 2018

Each year, the UPPO Scholarship Program awards financial assistance to students pursuing their education in college or vocational school studies. Announced at the annual conference in March, this year’s scholarship recipients are Anne Mickey, daughter of UPPO member Michele Hughes, and Jeremy Walsh, son of UPPO member Kendall Houghton. Each of them received a $1,000 renewable scholarship.

 

Anne Mickey is a double major in justice studies and community advocacy & social policy. She recently began taking graduate classes with plans to add a masters degree in justice studies. She hopes to pursue a career focused on community organizing and social justice. 

 

“I would really like to work for a nonprofit or government agency dedicated to social justice issues, especially organizations focused on racial justice,” she said. “Finding an organization that is focused on fighting for what’s right is important to me.”

 

Mickey is an events assistant for the ASU Center for the Study of Race and Democracy and vice president of ASU’s Rainbow Coalition, an umbrella organization for the school’s LGBT clubs, which acts as a liaison between the clubs and university administration.

 

The UPPO scholarship has been essential in allowing Mickey to pursue two undergraduate degrees and a graduate degree, while volunteering for student organizations that complement her studies. 

 

“The scholarship has been helpful in alleviating some of the financial burden that comes with college,” she said. “I have ASU’s highest merit-based scholarship, but that’s not enough to cover everything. I rely on scholarships like UPPO’s to fill the gaps, freeing me up to pursue my studies.”

 

Jeremy Walsh recently began his college career at Georgetown, where he is majoring in chemistry. His interest in the field originated with his grandfather, who was a chemist and a role model inspiring Walsh’s curiosity. In high school, he took honors-level and AP chemistry courses, solidifying his interest. 

 

Walsh is considering a double major in Chinese. He has studied the Chinese language and culture outside of school for approximately eight years and is interested in continuing his development. 

 

“Professionally, I'm currently unsure of exactly what type of job I want to do,” he said. “My biggest hope/goal would be to find a way to combine my interests in chemistry and Mandarin in a work setting.”

 

The UPPO scholarship has already been very important to Walsh’s college pursuits.

 

“As a student who is relying on my parents for financial support, the scholarship has helped me feel more responsible for my education,” he said. “Beyond the financial reasons, the UPPO scholarship team has been very supportive of me and very flexible in helping me as well, which makes the process of both applying to schools and applying for this scholarship much less stressful. I'm very grateful to have had the chance to utilize this scholarship and receive so much support from the UPPO community in different ways.”

 

The 2019 UPPO Scholarship Program is accepting applications through Dec. 15, 2018. Current UPPO members and their dependents may apply. Learn more about the past recipients and the program qualifications. UPPO members interested in supporting the scholarship are encouraged to contributedonate silent auction items or sponsor the program. Thanks to Barganier and Associates, Marketsphere, Phoenix Finders Group, ChoicePlus and Mike Ryan for already signing on as sponsors. 

 

 

 

Tags:  scholarship  UPPO Scholarship Program 

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Sports Gambling Expansion Creates Unclaimed Property Ripple

Posted By Administration, Thursday, October 4, 2018

On May 14, 2018, the Supreme Court struck down the 26-year-old Professional and Amateur Sports Protection Act (PASPA) for violating the U.S. Constitution’s 10thAmendment. This ruling cleared the way for the expansion of legal sports gambling in states other than Nevada, which has allowed such wagering since 1949 and was grandfathered in when PASPA became law in 1992. 

 

Four additional states – Delaware, New Jersey, Mississippi and West Virginia – have already changed their state laws and launched their states’ sports betting industries. Rhode Island and Pennsylvania have passed similar laws and are preparing for sports betting’s introduction in the coming months.

 

New Jersey has wasted little time taking steps to amend its unclaimed property law to account for the legalization of sports betting. New Jersey Assembly Bill 4442 specifies that funds left in inactive Internet gaming accounts will be considered abandoned property after three years under the state’s Uniform Unclaimed Property Act. 

 

Throughout most of its history in Nevada, legalized sports betting has been strictly a cash business. If a consumer wished to bet $100 on the Cleveland Browns to win Sunday’s game, for example, the bet was placed in person at a brick and mortar casino’s sports book. 

 

More recently, Nevada has allowed sports books to wager via mobile apps, as long as sufficient protections ensure gamblers are located within the state when using such apps. Typically, gamblers are required to open accounts with the casino in person by depositing funds into a personal account, accessible via the sports book’s mobile app. These funds are then used for future bets, with the account total increasing or decreasing based on the results of the owner’s bets.  

 

Under the New Jersey bill, property holders (casino licensees) would be required to attempt to contact online gambling account owners “by mail, phone and computer” before closing dormant accounts. Upon closure, the casino licensee would keep 50 percent of the abandoned funds, with the other 50 percent turned over to the state’s casino control fund. 

 

On Sept. 17, 2018, the bipartisan bill was introduced to the state assembly and referred to the Tourism, Gaming and the Arts Committee. If passed and signed into law, the act will take effect immediately. 

 

As sports betting continues to expand, additional states are likely to consider similar legislation to formalize guidelines for handling dormant online gambling accounts and subsequent fund distribution. 

Tags:  casinos  gambling  New Jersey 

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UPPO Advocacy Update: September 2018

Posted By Administration, Thursday, September 27, 2018

To help members remain aware of UPPO’s advocacy activities, the Unclaimed Property Focus blog recently began including a recurring Advocacy Update when legislatures are active or significant advocacy activity has occurred. Following are September 2018 activities and trends from UPPO’s Government Relations and Advocacy Committee (GRAC).

 

Holders Coalition Submits Comments, Meets with IRS Regarding Revenue Ruling Conflict

The Holders Coalition – a group of organizations, including UPPO, whose members hold or represent owners of property – submitted comments on Sept. 4, 2018, to Internal Revenue Service and Department of Treasury officials regarding IRS Revenue Ruling 2018-17. The comments seek clarification and guidance regarding compliance with the ruling, issued by the IRS on May 29, 2018.

 

Subsequently, Holders Coalition members, including UPPO members Jennifer Borden and Dana Terry, ICI and SIFMA representatives, met with IRS and Treasury officials. The meeting was productive, and the government representatives seemed to understand that the implementation timeline is tight and may consider delaying implementation. Discussion of other issues from the revenue ruling resulted in meeting participants agreeing to conduct additional research and reconvene for a follow-up meeting soon. Stay tuned for additional updates on this important topic. 

 

UPPO Offers to Assist Department of Labor

During a recent U.S. Chamber of Commerce event focused on retirement, a Department of Labor benefits regulator announced that work is underway to develop guidance for employers who no longer have contact with former employees who remain enrolled in company retirement plans. 

 

Preston Rutledge, assistant secretary of labor for the Labor Department’s Employee Benefits Security Administration, said the EBSA will work with businesses and trade groups to develop best practices regarding employers’ responsibilities to contact plan participants regarding their benefits. 

 

In response to this announcement, UPPO sent a letter to Rutledge, offering its support and assistance. Representing the unclaimed property holder community, UPPO can provide valuable input and perspective to the EBSA as it develops its employer guidance.

 

UPPO Surveys State Administrators About Recent Reporting Changes

UPPO recently surveyed state unclaimed property administrators, requesting information about a variety of possible changes affecting holder reporting. Twenty-five states responded. The information they provided has been compiled and is now available. View the survey resultsUPPO’s Fall Reporting Guide has also been updated to include this information.  

 

Priority Issue Workgroups

In preparation for the next congressional session, the GRAC Priority Issue Workgroups have been refining talking points and developing single-page position papers about key issues. 

 

California Posts Fall Holder Newsletter 

The California Controller’s Office recently published the latest edition of its quarterly Unclaimed Property Division newsletter for holders. The newsletter includes articles about optimizing owner reunification, automatically renewing CDs and interest billing assessments, along with a holder notice report checklist. 

 

New Jersey Introduces Sports Gambling Unclaimed Property Bill

A recent Supreme Court ruling cleared the way for legalized sports gambling to expand to states other than Nevada. New Jersey not only became one of the first additional states to allow such wagering, but also the first to consider the expansion’s effect on unclaimed property. New Jersey Assembly Bill 4442 specifies that funds left in inactive Internet gaming accounts will be considered abandoned property after three years under unclaimed property law. 

 

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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