Category: finders

Friday Lost + Found: Virginia’s Billion, Wyoming’s Scam Warning

Big Numbers Out of Virginia — The Virginian-Pilot has an article about an unclaimed property auction currently being hosted by the Virginia Department of Treasury.  Feel free to check it out if you are so inclined.  However, what caught our attention here was the passing reference to how much unclaimed property is currently being held by Virginia:  according to the article, “more than $1 billion is waiting to be claimed.”  (That’s right, with a “B”). 

Wyoming Warns of Unclaimed Property Scam — Along those same lines, when there is such a huge pot of money waiting to be claimed, it should come as no surprise that there are people out there who are trying to see if they can get a slice of it, honestly or not.  The Wyoming State Treasurer’s Office recently warned residents of a scam whereby so called “finders” identify potential claimants, and contact them, asking for personal information and offering to “help” them reclaim their money for a fee of up to 50% of the value of the property.  Not only is that fee unscrupulous, but the disclosure of personal information subjects the claimant to an increased risk of identity theft.  We’ve discussed finders before in this space, and while we will forgo the discussion of the relative risks and benefits of finders for today, suffice it to say that 50% is too much.

Finder’s Fees and Unclaimed Property

Last week, a variety of news sources in Ohio reported that the Ohio Department of Commerce (the government entity responsible for the Buckeye State’s unclaimed property program) issued a “cease and desist” order to a company that was allegedly charging Ohioans for unclaimed property claim forms.  In addition, the claim section of Ohio’s “Treasure Hunt” website has been revised to display a prominent disclaimer at the top:

A Claimant may file a claim WITHOUT the assistance of a paid professional finder.

 The website has also been revised to bar unclaimed property “finder” firms from printing claim forms from the Department of Commerce’s website.  Apparently, these finder firms operated by searching for and printing claim forms from Ohio’s website (a free service provided by the Department) and then “selling” those (free) forms to the individuals identified. 

While the relevant section of the Ohio Unclaimed Property Act does not, strictly speaking prohibit private “finder” firms from charging a fee to assist private citizens with the recovery of unclaimed property from the Department of Commerce, it does strictly limit such activities.  For example, the Act provides that no agreement to assist with claiming property is valid within the first 2 years after the property has been reported to the state, and the “finder fee” must be registered with the state.  In addition, the law has a number of disclosure requirements that specify certain terms that must be in the finder contract.

While we often write about the state’s interest in using “unclaimed funds” that it holds to balance budgets and make expenditures, it should perhaps come as no surprise that a number of private parties are also looking to grab a piece of the pie.  Agreements with so-called “finder firms” are allowed in many states, pursuant to which the finder agrees to assist a claimant with obtaining his or her money from the state in exchange for a percentage fee.  Indeed, in Escheatable‘s home state of New Jersey, the Unclaimed Property Act allows for a fee of up to 35% of the value of the property.  (see N.J.S.A. 46:30B-106).

Of course, states generally charge no fees for searching, claiming and receiving unclaimed property that they hold for the benefit of the rightful owner.  That does not mean that all finder firms are shady — indeed, there are a variety of situations where most of us will gladly pay another to provide a service that we don’t have the time, patience or expertise to do ourselves — but it does mean that a consumer should only enter into such an agreement if he or she understands exactly what he or she is paying for.  In the case of unclaimed funds, a finder fee firms (might) provide you with expertise or time (i.e., the they will deal with the the claim process so you don’t have to).  They are NOT, however, providing you with access to the money; the money is yours.  The finder is not “giving” you anything; the relationship is more akin to letting the finder firm mine for gold on land that you own; except, of course, in the case of unclaimed property there are two important caveats:

1.  First, if the finder is contacting you, there’s money being held for you (in other words, there is likely something of value on your land in our mining example);

2.  Second, and more saliently, what is backbreaking and dangerous work in our mining example is usually just filling out a form and sending it to the state.

Everyone is free to spend their time and money how they wish, and everyone has their own individual balance.  Just know what you are paying for.  In the case of unclaimed funds and finder firms, it is (maybe) time and expertise, not access, that you are buying.

A Look at the Other Side: Unclaimed Property "Finders"

We spend a lot of time here at Escheatable talking about the rights, obligations, and practices of unclaimed property holders.  Today, we look at the other side – unclaimed property finder firms.  Generally, these firms will locate unclaimed property (from state unclaimed property databases, court records, and/or using information provided by a holder), find and contact the apparent owner, and offer to handle the reclaim process — usually in exchange for a significant percentage of the claimed funds. 

These finder firms are subject to widely differing regulation from state to state.  In some states, such as Oregon, finders must be licensed by the state.  In other states, there is no licensing process, but the state unclaimed property act limits the fees that can be charged.  In North Carolina, for example, the Attorney General’s office recently announced that it took action against a finder firm for charging finder’s fees in excess of the twenty percent permitted by law.

A recent case from New Jersey involving a finder firm demonstrates that finder contracts will be thoroughly scrutinized by the courts.  Haven Savings Bank v. Zanolini involved two separate contracts (the Anderson Contract and the Zanolini Contract) pursuant to which a finder firm — Global Discoveries, Ltd. — agreed to assist with the reclaim of surplus funds generated by a sheriff’s sale.  In both cases, Global contracted for a 35% share of the claimed property, the maximum amount permitted by law (see N.J.S.A. 46:30B-106).  After the lower court refused to enforce either contract as written, the Appellate Division allowed Global to collect its 35% contingency fee with respect to the Anderson Contract, but not pursuant to the Zanolini Contract.  In so doing, the court made clear that although it would allow the 35% fee, it would insist that such a finder contract comply with all legal requirements. 

Pursuant to N.J.S.A. 46:30B-106, a finder may charge a fee of 35% if (a) the property is not yet dormant; (b) there is a signed agreement between the finder and the owner; (c) the agreement sets forth the “nature and value” of the property; and (d) the agreement sets forth the value of the “owner’s share” after the property is recovered.  Both the Anderson and Zanolini Contracts met the first three requirements, but the Zanolini Contract did not set forth the value of the “owner’s share.”  The fact that the “owner’s share” of the property could have been determined from the contract and a calculator was of no moment to the Appellate Division.  Instead, the Appellate Division determined that Global’s failure to include that information in the agreement itself  “leads inexorably to the conclusion that the Zanolini contract is simply not valid under the plain terms of the statute.”   

Accordingly, although some state unclaimed property laws allow finders to charge substantial fees, the Haven case is a reminder that the courts will insist upon total compliance with the letter of the law.