Aggregate Reporting Under the Microscope in California
Under most state unclaimed property laws, there exists a mechanism called “aggregate reporting” whereby the holder of the funds is permitted (or in some states, required) to report and remit items under a specific dollar amount (usually $50) in one lump sum, without providing owner name and address information. As we’ve discussed previously in this space, while aggregate reporting reduces administrative burden on the holder and on the state, that process is arguably inconsistent with the primary purpose of the unclaimed property laws — to try and reunite owners with their missing funds. Obviously, to the extent that the state does not have identification information for the owner of the funds, the state cannot search for that owner or take any action to return the funds.
A recent situation in California demonstrates this problem. According to a report by CBS 13 Sacramento, a fifteen year old California resident learned that his $30 savings account was turned over to the state by his bank because of a lack of activity. When he and his family went to search for the funds, however, they state was unable to locate the account. They eventually contacted CBS 13 consumer investigation reporter Kurtis Ming, who learned that since 2007 California brought in more than $68 million in funds without owner name and address. Ultimately, the bank – not the state – gave the money back to its customer, but the story isn’t over yet.
California Assemblymember Bonnie Lowenthal has authored a bill to close this unclaimed property “loophole” and would require holders to report owner-identification information for all amounts, regardless of size. Assembly Bill 212 would remove the provisions of California unclaimed property law that permit balances of less than $50 to be reported in the aggregate, and would also require holders to send notice to all owners of unclaimed property — regardless of the balance. The bill is currently before the Assembly Judiciary Committee.