Corporate Vultures Circling State Unclaimed Property Laws
By KARL FRISCH
October 23, 2015
Using the life and death of George Bell, who passed away some days before he was discovered in his home this past July, the Times recounts the arduous process that New York City public employees embark upon to make certain the estates of people like Bell end up in the hands of its rightful beneficiaries.
In the case of Bell — spoiler alert — distant relatives and friends he had not communicated with in years inherited his nearly half a million dollar estate, no doubt surprised both to have been named beneficiaries in the first place and also that Bell was of such ample means considering his modest lifestyle.
Bell's beneficiaries were eventually united with their share of his estate, but an untold number of Americans never learn that a deceased loved one has made arrangements for them, leaving behind life insurance policies, bank accounts, and other property.
By law, insurers and banks are required to try and find those entitled to this "unclaimed property." If they are unable to find those named by an insurance policy, they are required to turn the money over to state unclaimed property departments. If they fail to do this and instead choose to sit on it, they are unjustly rewarded with the ability to continue profiting from the investment of someone who is now deceased.
In order to make sure this does not happen, states are authorized to audit these companies to help assure compliance with the law.
In a perfect world, that would be the end of this story, but powerful corporate interests are working hard to quietly influence a little-known commission with the power to reshape state unclaimed property laws in their favor.
According to its website, the Uniform Law Commission (ULC) "provides states with non-partisan, well conceived, and well drafted legislation that brings clarity and stability to critical areas" of state law.
The ULC most recently made revisions to the Uniform Unclaimed Property Act in 1995, stating at the time that the measure was aimed at preventing "ordinary people for the most part, from losing their rights to property that is justifiably theirs. It is theirs because they earned it, inherited it, or were given it. Those entities and institutions that hold property are its custodians, not its owners."
Now, almost exactly 20 years later, the ULC has convened a drafting committee to revise the Act. If this committee's first round of suggested changes is any indication, it is the interests of the aforementioned "ordinary people" that appear to be in jeopardy. Since about 40 states have enacted some version of the ULC's unclaimed property legislation, efforts to water down safeguards that protect hardworking Americans could have a disastrous impact.
A letter sent to drafting committee members by several national consumer watchdog organizations earlier this month detailed several of the "detrimental revisions" being considered noting they "would be harmful to consumers throughout the country, making it more likely that they will lose property that today would be found and reclaimed."
That such dramatic changes to the Act are being considered is not by accident. Major corporations are actively pressuring committee members to alter the model legislation. Among those leading the charge are the American Council of Life Insurers (ACLI), whose member companies stand to make a windfall if laws are changed making it more difficult for states to recover unclaimed property. The ACLI's efforts have the backing of America's leading corporate special interest group — the U.S. Chamber of Commerce.
Meanwhile, Michael Houghton, a ULC commissioner responsible for co-chairing the drafting committee on this issue has fought to undermine state unclaimed property laws and works as a partner at a law firm whose clients would benefit greatly if the Act is gutted. In fact, a few years ago, Houghton co-authored an article praising state legislation to weaken Delaware's unclaimed property law, indicating that while it did not go far enough to help the "national business community," it was a step in the right direction.
It is hardly a surprise then that the "national business community" has taken such a keen interest in Houghton's drafting committee.
The sad truth is that the Uniform Law Commission's Drafting Committee to Revise the Uniform Unclaimed Property Act is considering a number of changes designed to keep everyday Americans separated from property that is rightfully theirs for as long as possible and thus enabling big corporations like life insurance companies and banks to make even bigger profits.
If the ULC's drafting committee is guided in such a way that it betrays a conflict of interest in its leadership or succumbs to industry pressure, it is the "ordinary people" who will lose what is rightly theirs. And it is precisely this type of corporate excess that the Uniform Unclaimed Property Act was developed to guard against.
Copyright 2015 Karl Frisch, distributed exclusively by Cagle Cartoons newspaper syndicate.
Karl Frisch is a syndicated columnist, on-air political commentator, and executive director of Allied Progress, a nonprofit organization that uses hard-hitting research and creative campaigns to hold powerful special interests accountable. You can connect with him on Facebook, Twitter, Instagram, and YouTube at @KarlFrisch.