BILL ANALYSIS �
AB 1634
Page 1
ASSEMBLY THIRD READING
AB 1634 (Bonnie Lowenthal)
As Amended March 22, 2012
Majority vote
JUDICIARY 8-0
-----------------------------------------------------------------
|Ayes:|Feuer, Wagner, Atkins, | | |
| |Dickinson, Huber, Jones, | | |
| |Monning, Wieckowski | | |
|-----+--------------------------+-----+--------------------------|
| | | | |
-----------------------------------------------------------------
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
State 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
AB 1634
Page 2
owners of unclaimed property.
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% of the recoverable property and 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.
FISCAL EFFECT : None
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.
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
AB 1634
Page 3
investigator for 10% of the property value.
While investigator contracts are legally required to
identify where the property is being held, their
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.
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 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 requires all future solicitations in this area to also
disclose the name, current mailing address, and telephone number
or Web site 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 is
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.
Under existing law, an agreement between an investigator and an
AB 1634
Page 4
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 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% 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 Code of Civil Procedure 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.
The bill establishes 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 does 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 provision strengthens consumer
protection by allowing owners who have contracted with a
soliciting investigation company to enforce these new
solicitation requirements in applicable situations.
Analysis Prepared by : Anthony Lew / JUD. / (916) 319-2334
FN: 0003167
AB 1634
Page 5