Blog Post: Think You’re Not a Holder of Unclaimed Property? Think Again!
- All 50 states have unclaimed property laws that require companies that possess abandoned property (a “holder”) to transfer that property to the state or potentially face investigations resulting in interest and penalties. Many companies limit their unclaimed property due diligence to traditional types of unclaimed property like wages and accounts payable. This may no longer be enough.
- States consider unclaimed property an important revenue stream, accounting for nearly $41.7 billion in property currently held on behalf of individuals and businesses according to the National Association of Unclaimed Property Administrators. State administrators are beginning to focus on potential new types of unclaimed property, such as life insurance proceeds, health savings accounts, securities, gift and stored value cards, and promotional programs.
- Read our recent blog post to find out more about these changes and how companies can respond.
Nebraska Primary Election Results
- Nebraska Primary Elections took place on May 13. Janet Stewart (D) and Doug Peterson (R) won the nominations for state attorney general.
- Pete Ricketts won the Republican nomination for Governor, beating Attorney General Jon Bruning by a narrow margin. In the general election, Ricketts will face Chuck Hassebrook, who was unopposed for the Democrat nomination.
- We will continue to provide updates on AG-related elections. For breaking news, please follow us on Twitter @StateAGMonitor.
New York Attorney General Settles With Debt Buyers to Resolve Allegations of Unlawful Collection of Time-Barred Debt
- New York AG Eric Schneiderman settled with Portfolio Recovery Associates, LLC and Sherman Financial Group, LLC, two companies that purchase consumer debt, to resolve allegations that they brought time-barred debt collection actions against consumers.
- The AG alleged that Portfolio and Sherman filed debt collection actions and obtained judgments without ensuring that the claims were timely under the statute of limitations of the state where the action accrued, which generally requires shorter periods than New York.
- The settlement requires the companies to have approximately 3,000 judgments totaling about $16 million vacated by the court, cease any further collection activities on those judgments, and enhance their debt collection practices. The settlement also requires Portfolio to pay $300,000 and Sherman to pay $175,000 in penalties and costs.
Illinois, Kentucky, and North Carolina Attorneys General Settle Allegations Against Marketing Company That It Operated a Pyramid Scheme
- Illinois AG Lisa Madigan, Kentucky AG Jack Conway, North Carolina AG Roy Cooper, and the Federal Trade Commission settled claims with Fortune Hi-Tech Marketing, Inc. to resolve a lawsuit alleging that it operated a pyramid scheme.
- Fortune Hi-Tech allegedly claimed that program participants could earn significant income by selling consumer products and services, including satellite television service, home security systems, and beauty products. Participants were allegedly required to pay substantial start-up costs and monthly fees to maintain their position in the company. Allegedly the company’s main business, however, was to recruit members and most of these members lost money by participating in this program.
- The settlement requires the company to pay at least $7.75 million in restitution to participants. The court’s order imposes a judgment of approximately $169 million, which will be partially suspended when the company surrenders certain assets to pay the restitution. The full judgment will become due immediately if the company misrepresented its financial condition. The settlement also prohibits the company from further misrepresentations, bans it from selling or otherwise benefitting from customers’ personal information, and bans it from collecting any additional money from customers.
- According to AG Conway, North Dakota and Texas had previously settled similar allegations with the company.
CFPB Proposes Rule Allowing Financial Institutions to Post Online Annual Privacy Notices
- The Consumer Financial Protection Bureau proposed a rule that would allow financial institutions to use a model disclosure form and post annual privacy notices online rather than delivering paper copies separately and individually to customers. The CFPB claims that this will make the disclosures more effective because customers could more easily see how these institutions use their personal information.
- The Gramm-Leach-Bliley Act generally requires financial institutions to send customers annual privacy notices describing whether and how the institutions shares the consumers’ nonpublic personal information and information on opt-out rights and procedures. The proposal would not allow use of online posting if the institution were sharing data in a way that would trigger consumer opt-out rights.
- In an unrelated matter regarding the CFPB’s involvement in privacy issues, the Online Interest-Based Advertising Accountability Program, an accountability program developed by the Council of Better Business Bureaus (BBB) and other advertising and self-regulatory industry associations, referred SunTrust Bank Inc. to the CFPB for refusing to participate in the program’s self-regulatory process. According to a BBB press release, the program had sent an inquiry to SunTrust regarding how it was using third parties to collect user web-browsing habits and whether it was using that information to deliver interest-based ads. SunTrust allegedly responded that complying with the demands would consume all of its allocated resources. The CFPB has not yet commented.
Airline Industry Contractor Settles Allegations of Minimum Wage Violations With New York Attorney General
- New York AG Eric Schneiderman settled with commercial airline industry contractor Air Serv Corporation for almost $20,000 to resolve allegations that it underpaid wheelchair attendants by improperly classifying them as tipped employees and paying them less than the state minimum wage.
- Under New York law, employers may pay tipped employees less than minimum wage, but the tipped employee must earn weekly average tips exceeding a certain threshold particular to each industry—the applicable threshold for these wheelchair attendants is $1.20 per hour. AG Schneiderman alleges that the wheelchair attendants employed by Air Serv did not earn a weekly average of at least $1.20 per hour in tips.
- The settlement requires Air Serv to pay restitution to the attendants of almost $16,000, pay the state $4,000 in penalties, designate a compliance officer responsible for ensuring the proper use of the tip credit, and file quarterly reports with the AG’s office.
Sixteen Attorneys General File Comments With EPA on Proposed Carbon Regulations
- West Virginia AG Patrick Morrisey and Nebraska AG Jon Bruning led a group of 16 AGs in filing comments with the Environmental Protection Agency (EPA) opposing proposed regulations that would require all new coal-fired power plants to use carbon capture and storage technology.
- The AGs argue that this technology has not been adequately demonstrated on a commercial scale and therefore violates the Energy Policy Act of 2005. The Energy Policy Act prohibits the setting of omissions standards based on government subsidized technologies that are not the best “adequately demonstrated” technology within the meaning of the Clean Air Act.
- These comments follow a letter AG Morrisey sent to the EPA asking the EPA to delay these regulations.
False Claims Act
New York Attorney General Settles Allegations of Overcharging With Office Supply Company for $475,000
- New York AG Eric Schneiderman settled with Office Depot, the state’s contracted office supply provider, for $475,000 to resolve allegations that it overcharged state entities for office supplies.
- AG Schneiderman investigated the matter pursuant to the state False Claims Act and the state Fraud Enforcement and Recovery Act, which amends the False Claims Act and allows the state to collect treble damages and between $6,000 and $12,000 per violation from companies that defraud the state government.
New York Attorney General Continues Probe Into “Insider Trading 2.0” by Requesting Information From Banks
- New York AG Eric Schneiderman continued his probe into what he calls “Insider Trading 2.0,” the allegedly unfair advantages obtained by high-frequency traders using high-speed technology to gain early access to market information, by requesting information from Goldman Sachs.
- AG Schneiderman sent a letter to Goldman requesting information about its high-speed trading operations. According to a news report, AG Schneiderman is also seeking information from Barclays and Credit Suisse.
Vehicle Service Contract Provider Allegedly Not Covered by Required Insurance Settles With Idaho Attorney General
- Idaho AG Lawrence Wasden settled with Gold Standard Automotive Network, Inc. to resolve allegations that it violated the state consumer protection act by operating without required liability insurance.
- State law requires that motor vehicle service providers obtain liability insurance to protect consumers if the provider goes out of business or cannot otherwise meet its contractual obligations. Gold Standard allegedly sold motor vehicle service contracts that were not covered by insurance and failed to make mandatory disclosures in its contracts.
- Pursuant to the settlement, Gold Standard must cancel those contracts and refund the consumers.
Texas Attorney General Sues Company for Approving Allegedly Fraudulent Medicaid Payments for Unlawful Dental Services
- Texas AG Greg Abbott sued Xerox Corporation and its wholly owned subsidiary, ACS State Healthcare, LLC (Xerox) for allegedly improperly approving Medicaid payments for orthodontic and dental services.
- Xerox bid for, and won, contracts with the state Health and Human Services Commission to perform Medicaid program administration, including evaluation of authorization requests for orthodontic treatment. State law generally excludes orthodontic services from Medicaid coverage, unless the orthodontic condition poses a health risk to the patient. According to the complaint, Xerox approved orthodontic services that were not medically necessary and therefore not authorized under state law.
- AG Abbott seeks injunctive relief, civil penalties, restitution of overpayments made by Medicaid because of Xerox’s allegedly unlawful conduct, interest, expenses, fees, and costs.
- Xerox described the lawsuit as “misdirected” and said it “will defend itself vigorously.”
State AGs in the News
Twenty-Two Attorneys General File Amicus Brief Opposing New York Gun Law
- A group of 22 AGs, led by Alabama AG Luther Strange, filed an amicus brief in the U.S. Court of Appeals for the Second Circuit against a New York gun law that bans certain kinds of semiautomatic firearms.
- A group of organizations and individual gun-owners challenging the gun ban filed the lawsuit. In December, a lower court opinion held that because the law related to achieving an important governmental interest in public safety, the law did not violate the U.S. Constitution’s Second Amendment.
- The brief to the Second Circuit argues that New York failed to show that the ban would increase public safety or decrease gun violence and is therefore unconstitutional.
Judge Rules on Airbnb Subpoenas
- A judge ruled to quash a subpoena issued by New York AG Eric Schneiderman to Airbnb because its demands for customer data was overbroad.
- We recently posted a summary of oral arguments during which AG Schneiderman defended the subpoena, which was issued as part of an investigation into potential violations of state tax and hotel laws that generally prohibit apartments in New York City from being rented for less than 30 days in the absence of the permanent occupant.
- The judge said that while a factual predicate had been established, the subpoena was overbroad because it was not limited to hosts in New York City, hosts that rented frequently and may be subject to the tax law, or to rentals of fewer than 30 days. The opinion reads that the subpoena as drafted, “seeks materials that are irrelevant to the inquiry at hand and accordingly, must be quashed.” The opinion also stated, however, that the subpoena was not unduly burdensome, did not seek impermissible confidential or private information, that the issue of whether the statutes the AG may try to apply are unconstitutional is not yet ripe, and that any remaining issues are unpersuasive or unnecessary.
- AG Schneiderman’s office plans to issue a new subpoena that addresses the judge’s concerns. A representative stated, “The judge rejected all of Airbnb’s arguments except for a narrow technical issue, and we will reissue the subpoena to address it.”