BILL ANALYSIS �
AB 1634
Page 1
Date of Hearing: March 20, 2012
ASSEMBLY COMMITTEE ON JUDICIARY
Mike Feuer, Chair
AB 1634 (Lowenthal) - As Amended: March 6, 2012
As Proposed to Be Amended
SUBJECT : UNCLAIMED PROPERTY
KEY ISSUE : IN ORDER TO ENSURE CONSUMERS ARE BETTER INFORMED
ABOUT THEIR OPTIONS, SHOULD A SOLICITATION MADE TO FACILITATE
THE RECOVERY OF ESCHEATED PROPERTY DISCLOSE, IN WRITING, THE
NATURE OF THE PROPERTY AND SPECIFIED CONTACT INFORMATION OF THE
PERSON OR ENTITY HOLDING IT?
FISCAL EFFECT : As currently in print this bill is keyed
non-fiscal.
SYNOPSIS
This non-controversial bill, sponsored by the State Controller's
office, seeks to require that any solicitation made to consumers
to facilitate the recovery of unclaimed property disclose in
writing, on the front page of the solicitation, the nature of
the property and specified contact information of the person or
entity holding the property. Because the bill applies to
property that has escheated to the state, the disclosure
required by this bill will have the effect of informing the
recipient of the solicitation that the property at issue is
being held by the State Controller's office, from whom the
property may be reclaimed at no charge to the owner. The author
contends this bill will help ensure that property owners know
all their options for retrieving unclaimed property,
particularly when receiving letters of solicitation from
investigation companies, so that they may make an informed
decision whether to hire someone to help with the retrieval
process. As proposed to be amended, the bill additionally
provides that a solicitation made after the date the SCO
publishes notice of the unclaimed property, if any exists, must
comply with the disclosure requirements for solicitations
established by this act. This proposed amendment is intended to
strengthen consumer protection by allowing owners who have
contracted with an investigator to enforce these new
solicitation requirements in applicable situations. There is no
AB 1634
Page 2
known opposition to this bill.
SUMMARY : Amends the Unclaimed Property Law to require written
disclosure of certain information in any solicitation made to
consumers to facilitate the recovery of unclaimed funds or other
property escheated to the state. Specifically, this bill :
1)Requires any solicitation made to locate, deliver, recover, or
assist in the recovery of escheated property to disclose in
writing the nature and value of the property and the name,
current mailing address, and telephone number or Internet Web
site of the person or entity in possession of the property on
the front page of the solicitation in at least a 12-point
type.
2)Provides that any agreement to locate, deliver, recover, or
assist in the recovery of escheated property made after the
Controller's publication of notice to the owner is valid if,
in addition to meeting existing conditions, any solicitation
made to the owner after the date of publication of notice
complies with the above content requirements for solicitation
letters.
EXISTING LAW :
1)States the intent of the Legislature that property owners be
reunited with their property, and that a more expansive
notification program be adopted that will provide, among other
things, notification by the state to all owners of unclaimed
property prior to escheatment and a more expansive
post-escheatment policy that takes action to identify those
owners of unclaimed property. (Code of Civil Procedure
Section 1501.5(c). All further statutory references are to
this code unless otherwise noted.)
2)Provides that no agreement to locate, deliver, recover, or
assist in the recovery of escheated property is valid if the
agreement was entered into between the date the property was
reported to the Controller by the holder of the property, and
the date of publication of notice by the Controller to
possible owners of the unclaimed property. Further provides
that such an agreement made after publication of notice is
valid if the fee or compensation agreed upon is not in excess
of 10 percent of the recoverable property and the agreement is
AB 1634
Page 3
in writing and signed by the owner after disclosure in the
agreement of the nature and value of the property and the name
and address of the person or entity in possession of the
property. (Section 1582.)
3)Requires the escheat to the state of specified property held
by a business association when the owner, for more than three
years, has not shown any activity, as specified, with respect
to the funds or property. (Sections 1513.5, 1516, 1520.)
4)Requires banking and financial organizations, as defined, to
make reasonable efforts to notify owners of certain property
by mail that the property will escheat to the state pursuant
to specified provisions of law. (Sections 1513.5(a), 1516(d),
1520(b).)
COMMENTS : This non-controversial bill, sponsored by the State
Controller's Office (SCO), seeks to require that any
solicitation made to consumers to facilitate the recovery of
unclaimed funds or other escheated property disclose in writing,
on the front page of the solicitation, the nature of the
property and specified contact information of the person or
entity holding the property. Because the bill applies only to
property that has escheated to the state, the disclosure
required by this bill will almost invariably have the effect of
informing the recipient of the solicitation that the property at
issue is being held by the SCO, from whom the property may be
reclaimed at no charge to the owner.
Need for the bill : According to the author, this bill is needed
to ensure that property owners know all their options for
retrieving unclaimed property, particularly when receiving
letters of solicitation, so that they may make an informed
decision whether to hire someone to help with the retrieval
process. As the author explains:
Currently, property owners can find their property through
the State Controller's Office website, fill out and mail a
claim form and have their property returned to them free of
charge. However, many investigators send solicitations to
property owners, claiming property can be reclaimed through
the investigator for 10% of the property value.
While investigator contracts are legally required to
identify where the property is being held, their
AB 1634
Page 4
solicitations are under no such requirement. Investigator
solicitations may not mention the description of the
property held or that it is held by the State Controller's
Office. When a property owner responds to the solicitation
and receives a contract, they may sign the contract without
reading that their property is being held by the State
Controller's Office. Without this notice, the property
owner doesn't know he or she has the option to reclaim the
property themselves. In addition, fewer property owners
may respond to the solicitations because they are unsure if
the solicitations are legitimate or a scam.
This bill would require contact information about the property
holder, which currently must be disclosed in recovery
agreements, to also appear in solicitations to recover property.
Under existing law, any agreement between a property owner and
an investigator to recover or assist in the recovery of
unclaimed property must disclose, among other things, the name
and address of the person or entity in possession of the
property. By definition, the entity in possession of property
escheated to the state is the State Controller's Office (SCO),
unless at that moment the property is in transit from the
previous holder to the SCO before the SCO assumes official
possession. According to proponents of the bill, owners of
unclaimed property do not always know that they have the option
of retrieving property directly from the Controller at no cost.
This bill would require all future solicitations in this area to
also disclose the name, current mailing address, and telephone
number or website of the person or entity in possession of the
property, to be printed on the front page in at least 12-point
type. Proponents of the bill reasonably contend that (1)
consumers are far more likely to see this information when it's
printed on the front of a solicitation letter, rather than
within a contract the consumer is already intending to sign; and
(2) disclosure will better inform owners of their options when
such information is more useful to them, i.e. at a point where
they may elect to take steps to recover the property themselves.
SCO enforcement of statutory requirements pertaining to
agreements to recover unclaimed property. Under existing law,
an agreement between an investigator and an owner to recover or
assist in the recovery of unclaimed property is only valid if it
meets certain timing and disclosure requirements. For example,
such an agreement is invalid if it is entered into between the
AB 1634
Page 5
date the unclaimed property was reported to the SCO by the
original property holder (typically a bank or corporation) and
the date the SCO publishes a required notice to possible owners
of the property. In addition, the agreement is only valid if
the fee agreed upon is 10 percent or less and it includes
specified disclosures about the nature, value, and holder of the
property, as previously discussed.
According to the SCO, it currently evaluates all such agreements
for compliance with Section 1582(a) before it processes any
claim and disburses appropriate amounts to the parties. If
there is statutory compliance, then the SCO typically will pay
the agreed-upon amount of compensation directly to the
investigator, and issue the balance of the unclaimed property to
the owner. If the SCO determines the agreement is invalid
because it does not comply, then it may pay the entire amount of
the property to the owner.
Proposed author's amendment to allow enforcement of solicitation
requirements in applicable cases where an agreement has been
signed. As proposed to be amended, the bill would establish an
additional requirement that must be met for an agreement entered
into after the notice publication date to be valid-namely, that
a solicitation made after the notice publication date, if any,
must comply with the requirements for solicitations established
by this act. This provision would not apply to solicitations
made before the notice publication date, i.e. those
solicitations that offer to help the consumer locate the
property before the SCO has already published the fact that it
holds the property, ready for retrieval. In addition, there may
frequently be an agreement between the parties where no prior
solicitation letter was ever sent to the owner, and in those
cases this proposed amendment would have no effect on the
validity of the agreement. This proposed amendment would,
however, strengthen consumer protection by allowing owners who
have contracted with a soliciting investigation company to
enforce these new solicitation requirements in applicable
situations.
The proposed amendment would amend subdivision (a) of Section
1582 to read as follows (changes are italicized):
1582 (a) (1)Any agreement to locate, deliver, recover, or
assist in the recovery of property reported under Section
1530, entered into between the date a report is filed under
AB 1634
Page 6
subdivision (d) of Section 1530 and the date of publication
of notice under Section 1531 is not valid. Such an agreement
made after publication of notice is valid if the following
conditions are met:
(i) the fee or compensation agreed upon is not in excess
of 10 percent of the recoverable property, and
(ii) the agreement is in writing and signed by the owner
after disclosure in the agreement of the nature and value of
the property and the name and address of the person or entity
in possession of the property;
(iii) any solicitation made to the owner by the other
party to the agreement after the date of publication of
notice under Section 1531 complies with subdivision (b).
(2) Nothing in this section shall be construed to prevent an
owner from asserting, at any time, that any agreement to
locate property is based upon an excessive or unjust
consideration.
REGISTERED SUPPORT / OPPOSITION :
Support
State Controller's Office (sponsor)
Opposition
None on file
Analysis Prepared by : Anthony Lew / JUD. / (916) 319-2334