QUINCY, Mass. (Legal Newsline) -
In the past 25 years, Bill Slade has witnessed key developments in the unclaimed property industry.
Competition increased as one primary contingency-fee auditor was joined by three or four others. Focus shifted from securities-related property to general ledger property, such as salary checks and insurance proceeds. And states advanced their outreach efforts, moving from newspaper notices to digital databases.
Slade, senior vice president of Xerox State and Local Solutions Inc., which operates the Unclaimed Property Clearinghouse (UPCH), contends that all of these changes resulted in more people finding their parents' or grandparents' money.
"We hear several stories where people realize they have some money coming back to them, particularly if it's a substantial amount of money," he said. "But that's all relative. Two thousand to someone could be very relevant. We do find a lot of low-low figure amounts going back to owners. It's also not unusual to find high figures."
According to its website, UPCH, headquartered in Quincy, Mass., is the largest reporter of unclaimed property in the U.S. It operates with more than 100 employees who provide unclaimed property reporting and support services to nearly 18,000 organizations in all 50 states.
Slade began his career in unclaimed property as the co-founder of National Abandoned Property Processing Corporation, which was acquired by Affiliated Computer Services Inc., a business process outsourcing and information technology company, in 2003.
Five years earlier, ACS had also purchased UPCH. Slade explains that David Epstein created UPCH in 1984 before Slade and his colleagues started NAPPCO.
"David achieved the thought of a clearinghouse to band together states for the identification and collection of unreported property," Slade said.
When Xerox Corp. acquired ACS in 2010, Slade continued with the company. In addition to its core business and ancillary services, like claims processing and custodial services, the company operates a website called MissingMoney.com.
Slade considers the website - a database of governmental unclaimed property records - to be a significant achievement. He said nearly seven million people conducted 63 million searches last year.
"The states are obligated to try to find the owners of property, and there are a lot of things that get done state by state," he said. "But we have a one-stop shop for owner reunification. Let's presume a lot of them are mobile in today's world, and lived in four or five different states. This is a free service we provide, a free service that the states provide."
Mark Pfeiffer, the director of unclaimed property at the Kentucky State Treasury, works with UPCH, since his office doesn't employ staff auditors. He said UPCH has been a contract auditor for the state in one form or another since 1988, and for many years, it was one of the few companies in the business.
He now works with eight contingency-fee auditors that mostly audit financial institutions and life insurance companies. His office puts out a request for proposal for auditors, and if interested auditors meet certain criteria, they sign a two-year contract and receive 12 percent of the money they return to the state.
According to Pfeiffer, the Kentucky State Treasury returned more than $64 million in unclaimed property since 2008.
"This is money that is not our money, it belongs to Kentuckians, and it's our mission in the unclaimed property division and the mission of the treasurer to return as much of this money as practically possible to the rightful owners," he said.
Kentucky State Treasurer Todd Hollenbach agreed that auditors like UPCH offer a vital service, particularly as his staff faces constrained resources. He adds that UPCH operates as his office's biggest partner, and continues to be professional and productive.
"They are sensitive to our needs and concerns," Hollenbach said. "They're not running loose like a bunch of cowboys out there, poking and prodding, and trying to make life difficult for businesses."
While Hollenbach sometimes receives calls from businesses who want to verify UPCH works for him, he never receives complaints about the company "running roughshod over them or treating them rudely," he said.
Mary Jo Hudson, an attorney at Bailey Cavalieri in Columbus, Ohio, who formerly served as the director of the Ohio Department of Insurance, agrees that the unclaimed property field has evolved in the past 15 years. However, from her perspective, the increase in the use of "aggressive" contingency-fee auditors only harms businesses.
Hudson, who handles unclaimed property defense work, argues that audited companies have few due process rights. She points out that state statutes allow for companies to call for due process after exams are completed, but by that time, they have agreed to auditors' requests in order to demonstrate their compliance.
"There is case law, not in the unclaimed property area but in other types of governmental work, that shows pretty significant due process violations for a government entity to have a stake in the outcome of an audit action," she said.
Hudson adds that many states support auditors, which makes it more difficult for business owners to voice concerns about unclaimed property audits.
"While legislatures say they want to be business friendly, this is easy money for the states so they don't want to turn it down," she said. "There hasn't been much of an effort to enact reform legislation anywhere in the country."
Melissa Hahn, the public information officer at the Illinois State Treasurer's Office, who spoke on behalf of Treasurer Dan Rutherford, said her office contracts with five auditors, including Xerox State and Local, because it's efficient and cost-effective. When asked how she responds to critics of contingency-fee auditors, she said Legal Newsline was the first to contact her with questions about such criticism.
"When we explain to people that the reason we do this is so that we don't have to send multiple staff all around the country to do the work, it just makes sense," Hahn said.
According to Hahn, the value of cash and stock remitted to Illinois exceeded more than $45 million in 2012.
When Slade meets critics of his company's work, he explains that its purpose is to help state treasurers and comptrollers reunite citizens with money they didn't even know existed. He also shares stories about people who realize their grandfather never cashed a check from a hard-labor job or their father named them as a beneficiary on his life insurance policy.
"No one could tell you that the money doesn't belong to the individual," Slade said. "The obligation is always there...I would say in the past 25 years, there used to be a lack of knowledge of what the obligation was. But now, there's a greater understanding."