Collector - March 2018 - 44
What To Do With Unclaimed Property
State law may dictate the process for managing unclaimed
consumer overpayments and refunds.
By Kim Rath
onsumer accounts may be overpaid
for various reasons: maybe the
consumer accidentally transmitted
the electronic payment twice, or simply
made an error when writing out a check.
Whatever the reason, when a consumer
overpays a debt obligation state law may
require debt collectors to refund the
overpayment to the consumer.
Some state laws only require a refund
if the amount overpaid is above a specific
dollar amount. For example, Colorado
regulations require a collection agency that
has received an overpayment of any debt
by more than five dollars ($5) to issue a
refund to the consumer. North Carolina
law requires collection agencies to refund
overpayment by a consumer of an amount of
one dollar ($1) or more.
Other states do not set forth a minimum
amount that must be refunded. For
instance, Minnesota law states that no
collection agency or collector shall fail to
return any amount of overpayment from
a consumer to the consumer. Absent a
governing law, internal company policies
or client directives typically dictate a
company's refunding process.
Sometimes collectors issue refunds to
consumers as required by their policy or
state law only to have the overpayment
returned in the mail or never cashed.
Then what? In such instances, collectors
may be required to remit the unclaimed
overpayment to the appropriate state's
repository for unclaimed property.
Each state has its own set of rules
for remitting and reporting unclaimed
property. The unclaimed property laws
of the state of the last known address of
the consumer will typically apply (though
not always). As such, collectors who work
in multiple states may be required to file
unclaimed property reports and remit
funds to more than one state.
While there have been efforts at
uniformity, requirements for remitting
and reporting unclaimed property still
differ across the states, which can make
compliance challenging. For instance, state
law may require a business to wait a set time
frame (referred to as a "dormancy period")
before turning the money over to the state.
While most states, such as Michigan
and Nevada, typically require money to be
returned to the state after three years, some
states impose shorter or longer time frames.
Annual deadlines for reporting eligible
unclaimed property also vary by state and
waver between a fall or spring/summer
Debt collectors need to be cognizant of
their obligation to comply with applicable
laws on unclaimed property, as failure to
comply with state requirements may result in
the imposition of undesirable penalties and
fines. To avoid such negative consequences,
companies need to maintain policies and
procedures that adequately identify and report
unclaimed property in a timely manner.
Kim Rath is ACA International's director of
UNCLAIMED PROPERTY RESOURCES
The National Association of Unclaimed Property Administrators offers helpful
guidance on state unclaimed property laws at www.unclaimed.org.
ACA SearchPoint™ document #2006, Handling Consumer
Payments, reviews state requirements for handling
payments, including refund requirements.
ACA members can read it here: