BILL ANALYSIS Ó
AB 2258
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Date of Hearing: May 4, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
2258 (Eggman) - As Amended March 16, 2016
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|Policy |Judiciary |Vote:|10 - 0 |
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill clarifies that transactions made through electronic
fund transfers (EFTs) shall constitute activity on an account
for the purpose of determining whether the state's unclaimed
property law requires escheat of the funds after a specified
period of inactivity.
FISCAL EFFECT:
Minor administrative cost savings to the State Controller's
Office (SCO), which administers the state's Unclaimed Property
AB 2258
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Program.
COMMENTS:
1)Background. Under the state's unclaimed property law,
financial institutions are required to notify the SC) when
there is no "live" activity between an account owner and his
or her account for three years, and the financial institution
is unable to contact the owner of the account. Thereafter, the
SCO must notify the account holder that the account will be
turned over (escheated) to the state if it remains unclaimed.
For many years, the financial industry has interpreted
"activity" to constitute some sort of human or "live" contact
by the account holder (i.e. going into the bank to make a
deposit/withdrawal, writing a check, etc.) Today, many
account holders deposit or withdraw money from their financial
institutions via an EFT, and thus do not go into bank
branches. The financial industry considers such transactions
as a passive activity and does not consider this dispositive
evidence that the account remains active. Therefore, these
active/"live" accounts are erroneously considered dormant and
trigger escheatment notices, which then require the account
holder to affirmatively confirm that the account is truly
active.
2)Purpose. The SCO, sponsor of this bill, contends that as a
result of financial institutions not acknowledging EBT
transfers as account activity, thousands of people who have
active accounts are unnecessarily sent letters each year
warning that failure to contact the financial institution will
result in escheatment of funds to the SCO. Accordingly, AB
2258 seeks to harmonize industry practices with the law by
specifying that transactions involving electronic fund
transfers, both one-time or recurring, shall be considered
activity for the purpose of determining whether there has been
a period of inactivity on an account. There is no known
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opposition to this bill.
Analysis Prepared by:Chuck Nicol / APPR. / (916)
319-2081