Health Care and Insurance and Technology

Forgotten accounts can lead to windfalls: State seeks Web vendor for unclaimed property

November 27, 2006

With $325 million in unclaimed property on hand, Indiana Attorney General Steve Carter has a simple request: Check the Internet to see if any of it is yours.

To make the process as easy as possible, Carter is searching for a vendor to upgrade and host its clearinghouse Web site www.IndianaUnclaimed.com. The attorney general's goal is to reunite Hoosiers with their cash-and in the process reduce a significant problem for businesses that need to get unclaimed property off their books.

"We're there to help every step of the way," said Carter's press secretary, Staci Schneider.

Most of the Web site's previous development has been done through the state's main information technology vendor, Indiana Interactive. Schneider said Carter wants to test the market to see if he can get a better product at a lower price.

That could lead to more frequent windfalls for Hoosiers-and who wouldn't like to be unexpectedly reunited with long-lost cash?

That's what happened this summer to Jeffersonville resident Carol Lee Woods, 64. The semi-retired owner of the used Jaguar and Mercedes dealership River-Benz Motors learned in July that she had $117,000 in unclaimed property when a Jeffersonville TV news crew surprised her with the revelation.

In the late 1960s, Woods had purchased 100 shares of Fashion Tress Inc. for about $800. After a divorce, she changed addresses and took back her maiden name. In the process, she missed much of her mail. Meanwhile, Fashion Tress changed its name twice: in 1973 to FT Industries Inc., and in 1983 to Claire's Stores Inc. Woods never heard about it-and assumed the Pembroke Pines, Fla.-based company had been shuttered.

Meanwhile, the stock gained value and split repeatedly. Now listed on NYSE, Claire's Stores has a nearly $3 billion market value.

"I was amazed. It just came out of the blue," Woods said. "It was even better than winning a lottery, because when you buy a lottery ticket, you have a modicum of expectation of winning some money. When this comes along, it just falls out of the sky."

The Indiana Attorney General's Office has been responsible for unclaimed property since 1967. Each year since Carter's election in 2000, the program has received and returned more assets from businesses that can't track down owners. Securities are the most common type, Schneider said, followed by uncashed checks, unpaid wages and insurance payments. Companies are eager to clear the cobwebs off their books.

Banks are one of the most frequent contributors. When customers move away, they often leave no forwarding address, forgetting unclosed accounts and unopened safe deposit boxes. Last year, for example, Chase Bank turned over nearly $543,000 in assets to Carter.

"We attempt to notify them. We end up turning that property over to the state because we can't find them," said Chase spokeswoman Mary Kay Bean. "Unfortunately, sometimes these things do happen. You lose track of people or their accounts."

It's not just a problem for banks.

Beth Stein, a director of Kansas City, Mo.-based MarketSphere Consulting LLC, specializes in helping businesses liquidate unclaimed property-and install the controls to keep it from accumulating. The health care industry is particularly susceptible, she said, because of the complexity of its copays and insurance claims. Retail, with its high seasonal employee turnover, also has a propensity toward the problem.

Unclaimed property laws vary from state to state. But they have one concept in common, Stein said: Companies aren't allowed to ignore the issue. If they can't reunite a property with its owner, they must at least show an honest effort.

"It's not something that can be ignored. States have become very active in ensuring that abandoned property is turned over," she said. "Truly the best thing [companies] can do is to research these items sooner rather than later. Try to find that employee who hasn't cashed their last three paychecks. Chances are you can find him if the check is only 3 months old. But if it's 3 years old, the process becomes much more difficult."

As for Woods herself, she said she plans to use some of her unexpected cash to buy gifts for her nieces and nephews, and perhaps a cruise this winter for herself. But she's putting the bulk right back into the market. After parking it in CDs for the short-term, she plans to reinvest much of it in Claire's Stores.

She has framed her original stock certificates-and the ceremonial check from Carter.
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