Money making deal?
When Americans lose track of money — in old, neglected bank accounts, paychecks they forgot to cash, unredeemed life insurance policies and the like — state governments are increasingly aggressive in taking control of the cash.
Now, with those efforts swelling state coffers by more than $40 billion and lawmakers using some of it to patch budget holes, new skirmishes are breaking out between states and companies with their own interest in holding on to the unclaimed property.
Companies accuse states of overreaching, imposing what amounts to a “stealth tax.” State officials counter the businesses are more concerned with keeping the assets themselves. Both sides acknowledge it’s not their money, while pointing out that many owners are unlikely ever to come forward.
Critics say those rightful owners too often get short shrift.
“The analogy is to finding somebody’s lost wallet. In Minnesota, anyway, we give people their wallets back. It’s just what we do here. But it’s not what the state is doing,” said Joe Atkins, a state representative from outside St. Paul who last year introduced a bill calling for increased funding to track down property owners and publicize the state’s program to return unclaimed assets.
While other states, too, have increased efforts to reunite owners with their property — some even setting up state fair booths to alert claimants — others are faulted for doing too little. And many states have changed laws to let them take control of more unclaimed property more quickly.
“The real motivation is for the state to get money for the state to use when they’re in financial difficulty,” said Joseph M. Belth, an emeritus professor of insurance at Indiana University who has followed states’ pursuit of unclaimed life insurance payouts. “They want to get their hands on the money.”
The assets in state lost-and-found programs have been growing rapidly for more than a decade. Every state keeps a list of those whose property it has claimed. California alone has 28.5 million on its list.
States stepped up pursuit of unclaimed property in the late 1990s, after restructuring by insurance companies exposed those firms’ inability to locate many policy holders. Many states have hired auditing firms to scrutinize the books of insurers, retailers and others, paying them multimillion-dollar fees for unclaimed property they have brought in.