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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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Insights from the NAST Symposium, Part 1

Posted By Contribution by Christa DeOliveira and Michael Unger, Wednesday, July 3, 2019
Updated: Tuesday, June 25, 2019

The National Association of State Treasurers’ (NAST) Annual Treasury Management Training Symposium held during May 2019 in Providence, Rhode Island, was engaging and enlightening. The National Association of Unclaimed Property Administrators (NAUPA) is affiliated with NAST and led the well-attended unclaimed property track of educational workshops and sessions. This blog post is part one in a series about the topics discussed in the symposium sessions.

 

NAUPA 3

Still under development, the NAUPA 3 format will use Extensible Markup Language (XML) to offer previously unavailable flexibility for the evolution of data fields/information reported and to accommodate state-specific requirements. NAUPA will create a standard suggested XML Schema Definition, with the understanding that states have different statutory, regulatory and administrative data reporting requirements. Therefore, states will modify the schema to fit specific reporting needs. While there will continue to be differences across states, having the state-specific schema will greatly assist transfer agents and other holders to appropriately program their systems and determine which data needs to incorporate into the report file. The schema will also provide a means for upfront data validation tools to be built. 

 

Although progress has slowed, the NAUPA 3 initiative has been both thoughtful and comprehensive. Originally anticipated for completion by the end of 2018, NAUPA 3’s introduction has been pushed back to the end of 2019. The format will likely be sent to NAUPA members for feedback on approximately August 1. Shortly thereafter, it will be shared with unclaimed property reporting software developers and the larger holder community. This will provide an opportunity for additional input and commentary. It remains to be seen how quickly state and holder systems can be programmed once the final format is determined.

 

After the new format is completed and presented to the holder community and software providers for feedback, there will be more necessary and time-consuming steps. Specific details on transitioning to NAUPA 3 on a state-by-state level, as well as the timeframe when old and new formats will be concurrently accepted, remain unknown. NAUPA anticipates encouraging states to accept both formats for about a year.

 

Strategic Plan

NAUPA’s 2018-22 strategic plan remains in effect. The association continues to make resolutions and policy position papers a goal. Previously, NAUPA determined a need for policy positions, and it plans to adopt official policy statements. On the short list is a paper backing the position that NAUPA does not support pure escheat where an owner’s rights are terminated. 

 

Combatting Fraud

States continue to share knowledge and best practices about processing claims and combatting fraud. Fraud detection and prevention methods include using identity verification and risk scoring tools to look for red flags. Such efforts may focus on specific email addresses, track IP addresses where claims originate and examine browser versions being used. 

 

Rapid completion of forms and use of all capital letters may raise red flags, as most claimants do not fill out forms quickly or use all caps. Analysis of online user habits continues to get smarter, but offenders are also getting more sophisticated. It is important that risk profiles and risk scoring continue to evolve.

 

What is an acceptable amount of fraud? Inserting enough friction in the unclaimed property claims process to stop all fraud could result in the costs outweighing the benefits. A tiered approach is advisable, such as under $50 and high dollar claims requiring different levels of scrutiny. With a layered approach, there is not a single solution. 

 

In practice, confirming the validity of uploaded documents is difficult. Sometimes employees lack sophistication on complex claims procedures, checklists and knowing when to ask for help. Claims processors can look for anything misplaced or unusual. Does the document exactly match itself? Are the fonts the same? Is it a copy of a website? Relying on more than one document provides more data points for substantiation and analysis. 

 

There can also be fraud in holder reporting. States rely on holders to report properly and to prevent fraud before property gets reported to states. For example, a holder paid with a fraudulent credit card and subsequently tried to file claims the next day. Such fraud can be prevented by waiting 10 days and ensuring full receipt of the payment remittance before making property available for claims via the state’s website.

 

To reduce the possibility of internal fraud, states can build processes, including segregation of duties, dual sign off, co-duties and steps to look for collusion. Rotating job functions, having clearly defined roles and verifying employees are performing only authorized duties also reduce risk.

 

Other Trends

Most states reported consistent year-over-year increase in property returned to claimants. 

 

More states are planning to transition to KAPS as their software system in part for online reporting features it offers for states and holders. Also, the KAPS system aids states in claims support, and some data validation tools assist streamlining.

 

Individual State Highlights

Highlights from the State of the States sessions included:

  • Wyoming raised awareness of its program to allow owners of property to donate property to charity instead of claiming property to have it returned.
  • Delaware reported that approximately 50% of holders invited to participate in the secretary of state’s VDA program have opted in.
  • The New Brunswick unclaimed property program establishment push is reportedly losing momentum. 
  • Kentucky announced it will be cleaning up RUUPA soon.
  • In addition to Washington assessing penalties, it will also be starting a self-audit program.
  • Illinois reports it is focusing on preneed funeral contracts.

 

The NAST Symposium unclaimed property track included important insights on priorities, trends and highlighted educational topics. While the topics covered may not directly or indirectly impact all property type holders, it is worthwhile to remain aware of NAUPA developments. It is also important to be informed of opportunities to work together with states, where our expertise and needs are aligned, and we can share our respective unique expertise and insights, and related unclaimed property challenges or issues. 

 

More information on this symposium will be available in future blog posts.

 

Christina DeOliveira is chief compliance officer with Linking Assets Inc. Michael Unger is a senior manager with Crowe LLP’s unclaimed property practice. 

Tags:  fraud  NAST  NAUPA  NAUPA 3  unclaimed property 

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Unclaimed Property News Roundup

Posted By Administration, Wednesday, January 16, 2019

Unclaimed property often makes news headlines beyond the frequent reports of states trying to return money to their citizens. Following is a recap of some recent stories getting news coverage from local and national media outlets. 

 

Unclaimed property: It’s not just for individuals and companies

On Dec. 19, 2018, KMBC news in Kansas City, Mo., reported that the Kansas and Missouri unclaimed property owner lists included many schools and municipalities. In addition to the news story, reporter Matt Flener tweeted that more than 900 schools in Kansas are owed more than $143,000; more than 500 Kansas cities are owed more than $195,000; and Missouri has undetermined amounts owed to more than 600 schools and more than 1,400 cities.

 

Fraudsters hit Arkansas unclaimed property coffers

On Dec. 15, 2018, several Arkansas outlets reported that the state auditor’s office paid out at least $40,000 in fraudulent unclaimed property claims. The scammers used stolen identities to claim the funds. In response to the discovery, Auditor Andrea Lea told state officials her office had enhanced its verification process.

 

It’s not easy retrieving green

On Nov. 29, 2018, NBC Connecticut reported on challenges one of its viewers had claiming $138 in unclaimed property despite following the state’s instructions. The television station’s consumer reporter intervened and successfully helped the fund owner get her money.

 

Fame, fortune and uncashed checks

A popular, recurring unclaimed property news story highlights celebrities who appear on state unclaimed property lists. One of the latest examples of this appeared in the Nashville Tennessean on Nov. 21, 2018. The newspaper discovered that Tennessee’s unclaimed property list included two checks totaling $179 owed to musician Keith Urban, a $100 manufacturers rebate owed to singer Trisha Yearwood, and $150 in telecommunications payments waiting to be claimed by hockey player Pekke Renna.

Tags:  Arkansas  fraud  Kansas  Missouri  municipalities 

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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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Unclaimed property is ripe for fraud threats

Posted By Administration, Thursday, January 5, 2017

Whenever large amounts of money change hands, the likelihood of fraud exists. Thus, unclaimed property presents a variety of opportunities for potential fraud. Property owners, state unclaimed property departments and property holders can all be targets of dishonest attempts to profit from unclaimed property.

 

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 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.

 

Claims fraud is another common problem. Inspired by published lists of unclaimed property owner names, people misrepresent themselves to the state in an attempt to claim property that doesn’t actually belong to them.

 

Property holders must also be on guard against potential fraud, which often comes from internal sources—employees who identify opportunities to use unclaimed property for their own gain.

 

“One reason we see fraud related to unclaimed property at the holder level is because the money has been forgotten by the owner,” says Laurie Andrews, unclaimed property reporting technical director for Keane. “It may be sitting in a GL account that nobody touches or on an uncashed check list where the check has been floating out there for an extended period of time. The apparent owner may not know about the money or doesn’t seem to care about the funds.”

 

There are multiple methods dishonest employees use to access property not belonging to them. If a single person controls the assets, and prepares and submits unclaimed property reports, they may simply replace a legitimate property owner’s personal information on the report with their own details. They then go to the state to claim the funds.

 

In some instances, they may act before the property is escheated. Just before the end of the dormancy period, rather than doing due diligence and reporting an uncashed check to the state, for example, they may void and reissue it. To reduce the chances of detection, they cut the check to their credit card or utility company—perhaps the same one used by their company—instead of making it out to themselves.

 

“According to criminologist Donald Cressey’s hypothesis, with every fraud there are three components: opportunity, rationalization and pressure,” Andrews says. “The only one of those within the holder’s control is opportunity. Rationalization and pressure are self-imposed by a person committing the act. So, holders should take steps to reduce opportunity.”

 

Internal controls to safeguard held assets include:

  • Establishing a fraud policy.
  • Segregating duties.
  • Putting checks and balances in place for movement of funds between general ledger accounts.
  • Setting up software alerts to notify managers of unusual data changes for high-balance accounts.
  • Maintaining an ethical culture from the CEO down.
  • Conducting annual or periodic unannounced internal audits.
  • Holding annual fraud training throughout the organization and ensuring internal auditors have a thorough understanding of unclaimed property.
  • Keeping fraud procedures and unclaimed property procedures current with practices and requirements.
  • Maintaining an anonymous employee fraud tip line, and responding to allegations quickly and thoroughly.

 

“Internal controls will vary across an organization depending on property type,” says Ryan Hagerty, manager for KPMG. “It starts by having an in-depth system of checks and balances.”

 

Fraud threats against holders may also come from external sources. As with internal controls, policies, procedures and processes for handling and responding to claims should be thorough.

 

“While training of claims processors is important, multiple levels of management oversight should exist to ensure true segregation of duties,” Hagerty says. “The higher the value of the claim, the more layers of approval that should be required to reduce the financial impact of fraud at each occurrence.”

 

When dealing with property that has multiple owners—funds held in trust, multiple business owners and married couples, for example—extreme care should be taken when a claim attempt is made but all of the owners are not included. Business disputes, divorces and battles between heirs can lead to one party attempting to parties attempting to get more than their fair share.  

 

“Issues can arise when payments are owed to small businesses with multiple owners, individuals whose names have changed due to marriage, joint property owners or estate heirs,” Hagerty says. “When claimants request a refund check be issued in the name of their business or to the exact name and address the holder has on record, there is less of a concern of external fraud. However, caution should be taken if an individual attempts to claim property that is jointly owned or held in the name of a business entity. It’s important to require documentation to support the validity of these claims.”

 

Scammers seeking to claim another entity’s property may use fraudulent power of attorney documents they created and had unethically notarized. Unlike estate administrators and executors that can be easily verified, powers of attorney are not commonly registered by a government entity. This puts holders in a difficult position when faced with a claim from someone presenting power of attorney documents.

 

“Sometimes holders have to depend on the ‘sniff test,’” Andrews says. “If something doesn’t feel right, it probably isn’t, so you need to look into it further.”

 

To learn more about unclaimed property fraud, join Andrews and Hagerty, as they lead the Don’t Make a Fraudian Slip session at the 2017 UPPO Annual Conference. They will discuss how holders can tighten internal controls, safeguard assets, develop procedures for validating due diligence claims, and protect themselves against other potential scams.

 

 

Tags:  employee theft  fraud  powers of attorney  unclaimed property 

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Fraud originating from the California preliminary report is still an issue

Posted By Administration, Thursday, January 28, 2016

Last spring we reported on the issue of fraudsters attempting to claim property as the rightful owner. These fraudsters are using the data published from the California Preliminary Report to get holders’ contact information and sending fraudulent claim letters attempting to receive money not rightfully owed to them.

Below are red flags and tips to keep you mindful of the possibility, published in the California spring 2015 newsletter

Keep these tips in mind prior to releasing funds:

1) A holder should always request that the property owner provide proof of association to the property, such as:

  • Photo identification;
  • Proof of reported and/or current address; and/or
  • Proof of entitlement

2) A holder should always have a system in place to validate any documents provided.

 

3) A holder should always exercise caution any time a property owner:

  • Requests to change the reported address;
  • Requests a wire transfer (especially overseas);
  • Is irate and not willing to go through the claims process;
  • Threatens legal action; and/or
  • Changes his or her story

What to do when you believe the person doesn’t demonstrate ownership?

In these instances, California allows the holder to send the property to the State Controller’s Office to facilitate the reunification process.

If you’re interested in seeing an example of a fraudulent letter, here’s an example with holder and “owner” information redacted received by a holder.

Questions? Contact California’s Fraud Unit at (916) 464 - 6259 or email Gillian Knight at gknight@sco.ca.gov.

 

Tags:  California  fraud  preliminary report  unclaimed property 

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