A post by Pat
Historically, escheat was the forfeiture of estates to the crown, or to the lord of the manor, when the owner or tenant died without heirs. Today, it means state confiscation of unclaimed property when a person dies intestate. Banks and businesses are also required to turn over to the state unclaimed funds in accounts when the owners cannot be traced. It has never meant any unclaimed property imaginable automatically becomes the property of the state. Now the government is more than ever a money-sucking parasite so we might be hearing more cases like this one:
DC Sues AT&T for Unused Customer Minutes
In a rather bizarre case, the District of Columbia is suing AT&T for the value of unused money on calling cards owned by someone else.
The attorney general for Washington D.C. has filed a lawsuit against an AT&T Inc (T.N) unit, seeking to recover consumers’ unused balances on prepaid calling cards. The suit claims that AT&T should turn over unused balances on the calling cards of consumers whose last known address was in Washington, D.C. and have not used the calling card for three years.
“AT&T’s prepaid calling cards must be treated as unclaimed property under district law,” the attorney general’s office said in a statement. According to the attorney general’s office, that sum, known in the industry as “breakage,” represents some 5 to 20 percent of the total balances purchased by consumers who use the calling cards.
States and municipalities have often similarly used unclaimed property laws, known as escheat laws, to claim ownership of unused retail gift card balances.
Escheat makes some sense in the case of physical property that is ownerless or unclaimed. For example, property owned by someone who dies without a will or survivors escheats to the state. Ditto, say, tax refunds that are unclaimed after a certain period of time. Something has to happen to that property, after all, and the government — representing the community — is the natural beneficiary of last resort.
Escheat makes some sense in the case of physical property that is ownerless or unclaimed. For example, property owned by someone who dies without a will or survivors escheats to the state. Ditto, say, tax refunds that are unclaimed after a certain period of time. Something has to happen to that property, after all, and the government — representing the community — is the natural beneficiary of last resort.
In the case of calling cards or gift cards, however, we have a contract between a firm and an individual: A $50 gift card allows the holder to buy $50 of goods or services from the firm within a specified period of time. The failure of the holder to cash in the cards does not — or, at least, should not — create cash value that defaults to the state. Lots of transactions with theoretical value go uncompleted and the beneficiary is the other party.
If, for example, I promise to buy someone a beer the next time they’re in town but they don’t come back to collect the beer, do I owe the mayor a beer? Or, using the example here, the retail value of said beer? Do I have to leave him a tip, too?
How are intangible unused minutes any different than a gallon of unused milk I don’t consume by the expiration date? Just because the minutes don’t curdle, the value of those minutes becomes the property of the government?
The only glimmer of imagination from government is its schemes to take others’ property for itself. Kings would envy the possibilities.
I did extensive research on potential revisions to Florida’s intestate succession statutes when I worked for the state legislature. I can see the point you’re making, but the line between tangibles and intangibles you’re drawing doesn’t seem nearly so bright to me. Contracts for services and future payment are bought and sold to third parties constantly: a promise to pay certainly has a present market value.
Are you saying that these things somehow cease to exist upon the decedent’s death? Death doesn’t usually extinguish property rights. Certainly if the decedent had a will, or intestate heirs, the property would pass by bequest or by intestate succession. But if they have no successors, the other party to the contract gets a windfall? I’m not saying you’re necessarily wrong, just that the issue strikes me as more complex than you’re suggesting.
Hey Dave J. I knew this would draw you out. 😉
I’m sure it is more complex because lawyers are involved. All I’m saying is that government on all levels is looking for ways to haul in more money which means new fees, fines, taxes, surcharges and whatever else they can come up with no matter how far out the reasoning goes. Trying to grab the value of unused minutes seems to me to be quite a stretch for unclaimed property. People wind up with unused minutes all the time. The unused minutes in active accounts are forfeit so why should the unused minutes in a dormant account be a gain to the state? I know some states claim the unused portion of gift cards, but I find that overreaching too. Bit by bit, slice by slice, the government rationalizes taking more and more of what shouldn’t belong to it.
I don’t see this as escheat. There are laws about what you describe in most states, though I haven’t heard of a lawsuit over it. What this really sounds like is unclaimed commercial property, not personal property. I heard about this recently, that if a company goes out of business, but they sold, say, gift cards, some states consider that unclaimed property, and the recipients of said gift cards can go to the state and reclaim that money. It would’ve been set aside at the time of bankruptcy, or the sale of the company to another holder.
This thing with AT&T sounds like a bird of a different feather. AT&T hasn’t gone out of business, or been sold in a deal where the new owner disavows some obligation that AT&T had with its customers, yet they are still required to set aside some money as “unclaimed property”. I guess this is one of those things were the proviso applies, “state (or jurisdictional) law may vary, and conditions of this offer may not apply to you.”
Legalized extortion… amazing.