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DC Sues AT&T For Unclaimed Phone Minutes
Suki I submits news that Washington, D.C.'s attorney general has filed suit (District of Columbia vs. AT&T Corp, Superior Court of the District of Columbia), claiming the city has the right, through laws applying to unclaimed property, to unused calling-card balances held in the name of D.C. residents. "The suit claims that AT&T should turn over unused balances on the calling cards of consumers whose last known address was in Washington, D.C. and have not used the calling card for three years. 'AT&T's prepaid calling cards must be treated as unclaimed property under district law,' the attorney general's office said in a statement. ... [That sum] represents some 5 to 20 percent of the total balances purchased by consumers who use the calling cards. States and municipalities have often similarly used unclaimed property laws, known as escheat laws, to claim ownership of unused retail gift card balances."
Suki I links also to Reason Magazine's coverage.
This is law in many places... leave a balance in a bank account and fail to respond to any correspondence or make any transactions, and that money is transferred to the government who will publish your name in a massive newspaper insert, and then give it back to you if you claim it by proving the social security number the account was under is yours, and if that times out it goes to the government to do whatever they want with it.
Gift cards in many places have taken up the retailers on "if this fee is not allowed by law" to kill off inactivity fees. You now have many years or until the store shuts its doors for good (even during a post-bankruptcy liquidation that operates under the store's name) to use that money.
So, why does AT&T and the other phone companies think they can get away with voiding cards they don't hear from for three years and keeping the money? It's an unclaimed balance, and businesses aren't allowed to profit from such things in many other cases... what's the difference?
Finally. I HATE the way retailers are predating on consumers. I do not give gift cards because of this. Companies are stealing by devaluing cards. They have our money, interest free. The gift cards should stay valid forever. I hope the government nails them on this hard. Retroactively too.
The problem is you have it backward. This sort of law did not come into being because of retailers devaluing gift cards, retailers started devaluing gift cards because of these laws. Back before gift cards, when there were only gift certificates, states started passing laws that if a gift certificate was not redeemed after a certain time, the retailer was required to turn that money over to the state.
The truth is that all men having power ought to be mistrusted. James Madison
Yes they will claim her "Nookie"... The Government's being screwing people for years.
GrpA
Enjoy science fiction? "Turing Evolved" - AI, Mecha, Androids and rail-gun battles. What more could you want?
Wow. I gotta hand it to them. It is times like this when when we should all take note of how lawyers really are a breed apart. I understand the theory, and it does makes sense. Mind you, understanding and agreeing are not one in the same. But how twisted do you have to be to come up with stuff like this? I never would have thought of that!
As the said in the LotR about the lawyers foreclosing on the shire ( I think it was LotR, The Revenge ).
"There's something strange at work here. Some evil drives these creatures, sets its will against us."
I don't think AT&T is voiding the cards. Washington, D.C., seems to be asserting that the card numbers should expire after three years. But why 3 years? Why not 5? Or 7? Or 10? Or 50? I assume AT&T will argue that 3 is arbitrary and, of course, too little time. I also assume that AT&T will argue that a certain federal agency in Washington, the FCC, regulates all things telephone, so (dear District), kindly go take it up with them. And, if those two arguments don't work, naturally AT&T would provide the District with about 386,200 calling cards, each with an average of 6 minutes of call time remaining, so that the city government can hold onto the actual unclaimed property until citizens reclaim their cards. After all, those citizens purchased minutes, and that's the unclaimed property in question. There's no cash there any more.
As consumers, we might hate it, but you have to think of it this way... a gift card is an outstanding debt. A business doesn't want to have thousands or tens of thousands of tiny outstanding debts floating around FOREVER. That is the main reason there are "fees" to reduce the value of the card to zero when it isn't used.
It is the same idea as having checks expire after 180 days. If someone doesn't cash the check, it can't just sit out there "forever". The business needs to write off that debt so they can clean up their books. Otherwise, someone could come back 10 years later and cash it. Think of your own checks- would you like it if someone you wrote a check to sat on it for 5 years, then cashed it at a time when you least had the ability to pay for it?
I don't think it is unreasonable to have some type of expiration date or balance reduction time limit on gift cards, as long as it isn't too soon.
"Think of your own checks- would you like it if someone you wrote a check to sat on it for 5 years, then cashed it at a time when you least had the ability to pay for it?"
Since my money is generally invested somewhere, yes. I'd love it if I got to collect interest for 5 years on every check I ever wrote. As for the other half of your question, I would think any sensible person would consider the money 'spent' as soon as the check was written, and not spend it on something else.
A.
...bringing you cynical quips since 1998
This action sounds like they're trying to prevent at&t to get unfair advantage over selling stuffs they have no intention to provide service for. They probably bundled minutes with some product and most of their customers payed for the service, but never intended to use it. So at&t got unfair compensation for selling bogus service.
If practises like this are not removed, the market will be full of gift cards and calling cards, with most of the people's money going to something they're not going to use. It sounds pretty good principle that when money changes hands, there is equivalent service or valuable stuff going the other way. Bogus services where this is not true should be removed from the marketplace. Guess unused calling cards have this kind of thing that money moves but service does not. At&t's competitors who do not have similar practices will be in disadvantage for not scamming their customers.
So sounds like very reasonable action by the government. At least if they already have laws they can use for it! (they didn't invent the law just for this at&t's case :-)
Citation needed.
I agree. I can't imagine that there would be an organization (let's call it a "knab") that if you deposited money with them, got something in return, they could manage these outstanding liabilities that you could redeem for the product at any time in the future, near or distant. In the meantime, this fictitious knabs would be free to invest your deposit safely until you withdrew it. Knabs would have a terrible time trying to keep track of all these accounts on their books, and couldn't possibly make money, so much so that I can't imagine a world with a knab.
Also, what's so hard about keeping track of all these inactive accounts? It's not like they have many businesses have a hand-written ledger that they have to re-copy all account values around. Since all the accounts are likely similar, automated processing should be able to handle the number, whether it's processing 100 or 10,000.
That's reasonable. There's one problem though - if the issuer can profit from unused balances the issuer has an incentive to encourage people not to redeem their gift cards.
Requiring unused balances be transferred to the public coffers removes that incentive and retains the benefits of gift cards that expire.
So anything that's unclaimed like this defaults back to the city? I wonder what they're going to do with the remainder of everyone's unclaimed, unlimited internet access each month. Did they pool the unused hours off of old AOL CDs? What about all-you-can-eat buffets? Solved DC's hunger problems right there.
I know all of us are pondering the same thing:
Does this apply to unused gamecards for WoW? Does government have the right to thousands of hours of unused WoW gametime?
Yes, if you were to purchase the gamecards and never cash them in Blizzard would not be allowed to just void them. The government would have the right to take them and hold them for you and if you did not collect them after a certain while the government could do whatever with them.
If you're payees could hold a check and deposit it at any arbitrary time t, after five years it's possible your checking account would have to have a balance in tens (if not hundreds) of thousands of dollars. You're passing up hundreds of dollars a month in interest or dividends on other uses of that money, in order to absorb the risk of other people cashing the check whenever.
Don't blame me, I voted for Baltar.
There is another reason for governments to escheat funds that I haven't seen posted. It is a fact that governments make a tidy sum of money off of these transactions, as many escheated funds are never claimed. For some governments, it is a material source of revenues.
For that reason, governments are not aggressive in alerting taxpayers that they are holding their funds. Some US states have an on line mechanism for submitting a claim, and most government put a legal notice in a paper once a year, but the actual process to secure such funds tends to be complex (due to security concerns) and lengthy (because we're dealing with the government, after all).
I personally see it as a fight between two entities (the corporate world v. the government), neither of which is thrilled about giving you your money back...
As for the other half of your question, I would think any sensible person would consider the money 'spent' as soon as the check was written, and not spend it on something else.
The problem with that theory is that it only takes one such check to make your account statements not match your own records from that point on, which would become a bookkeeping nightmare.
STFU statist. This is slashdot, and all problems are PROVEN to be caused by governments, not private corporations. No "citations" are needed. Who is John Galt?
This is a bogus claim, because the alternative is simply not having the money. There are plenty of checking accounts with nonzero interest.
An example to make things clearer:
Imagine that you write 12 checks per year (one a month), each of which is in the sum of $1000. In case A they get cashed immediately in case B they get cashed one year later.
Case A: You make zero interest, each month $1000 is deducted from your checking account. .6% (for ease of math), we would have made $720 in interest.
Case B: For the month you make $1000 * 1/12 of a year's interest. The second month $2000 * 1/12 of a year's interest. And so on until the 12th month where you make $12000 * 1/12 of a year's interest. Then things begin declining as the money begins getting taken out. (so month 13 is $11000 * 1/12, and so on). After 24 months, your $12000 has been deducted. However, assuming an interest rate of
I admit that I am a "deadbeat". I have some rather large, unclaimed and unpaid debts that are over 3 years old. Please let me know when you wish to take those over from me. Thanks...
Oh wait, how come it's different suddenly?
Seven puppies were harmed during the making of this post.
Sorry, I don't have a citation. However, I worked as a manager of a retail store before there were gift cards. When we sold gift certificates we had to keep careful record of when they were sold and when they were redeemed, if they were not redeemed within a certain time period (my recollection is two years, but I'm not sure) we had to report it to the home office so that they could remit the money to the state. This policy was new (not because the law was new, but because the company I worked for had just found out about it), and they introduced expiration dates for gift certificates at the same time (the expiration date coincided with the date at which they were required to turn the money over to the state). Stores that were in states that did not have such laws did not have expiration dates on their gift certificates.
The truth is that all men having power ought to be mistrusted. James Madison
3-113. DATE OF INSTRUMENT.
(a) An instrument may be antedated or postdated. The date stated determines the time of payment if the instrument is payable at a fixed period after date. Except as provided in Section 4-401(c), an instrument payable on demand is not payable before the date of the instrument.
Do you even lift?
These aren't the 'roids you're looking for.
Your country spends way too much time litigating stupid shit instead of actually solving problems.
Hey, you have to go with whatever talents you have. We happen to be very good at litigating stupid shit, thank you. Actually solving problems, not so much....besides being a lot harder, it might actually reduce the amount of stupid shit available to litigate. Then where would we be? Who's going to pay to retrain all those out of work Stupid Shit Litigators? We might get desperate and have to import other countries' stupid shit to litigate. What would that do to our balance of trade?
Clearly, you just do not understand how America works...
"Every great cause begins as a movement, becomes a business, and eventually degenerates into a racket." -- Eric Hoffer
What I don't get is why a usually libertarian sanctuary like /. doesn't seem to have a problem with the states grabbing unclaimed property? Hell both sides are already taxing and spending like there is no tomorrow, why should they have the right to grab someone's stuff because they haven't used it in x amount of time? What business is it of theirs?
We already have them practically turning us upside down and shaking in hopes of loose change falling out, lets not give them more ways to snatch, okay?
ACs don't waste your time replying, your posts are never seen by me.
i still don't see your point. what you're saying is that it would be better if you knew exactly when the check would be cached, because then you'd be able to actually invest your money until then, but that isn't an argument against a long period of time between check writing and cashing. it's the same as saying it would be better to have money than not have money, it's a trivial observation but doesn't contribute anything since there is no genie that gives you money just because you wished for it.
the fact is that you don't pass up the chance to invest all the money you owe to someone if check cashing delay were possible, since if it isn't there would not be any money to invest at all. interest in a checking account triumphs no interest at all, it's competitiveness with interest in a savings, money market or cd account does not matter since it is not an option. and the only work you do for maintaining liquidity is keeping the cash in your account, which is no work at all.
I think the general principle behind that would be
"This valuable item is not in use, it is not on private property, its rightful owner has for all intents and purposes forgotten that it existed anymore and will very likely not use it ever again. But all citizens have an interest in not letting value vanish, so it is appropriate that the disclaimed value is transferred to the State to use it. That way, all can benefit from lower taxes and higher revenues. No one is hurt, because the value was disclaimed long ago and would have otherwise benefitted someone who's not the rightful owner or no one at all when the value finally vanished."
AT&T or any other gift card issuer have the money and never had to deliver any goods. They are not the rightful owner of the money unless they found a way to hold up their part of the deal. Letting them keep the money for unredeemed gift cards would be an unjust benefit for them, even introducing an incentive to prefer "store money" instead of Fed Money. Because it is impractical to have all stores track down the gift card buyers, the State can reappropriate the funds and put them to use before the store goes bankrupt or moves out of state and the monies are finally lost.
I'm surprisingly okay with that, because I think it reduces the incentive of businesses to use anything other than the green Fed Money known the world over or to devise schemes that leave over untold uselessly fractioned monies. The State as a catch-all for fall-out from the daily business routines is not impractical. Use it, claim it or the State puts it to good use for you before it is lost.
The State better not even think about applying that principle to real estate or bank accounts held in real currency. These are property forms especially chosen to store value as they are unperishable. Reappropriating them is only acceptable when their owner died and absolutely no living heirs can be found for twenty years. But anything else than that will warrant an early Guy Fawkes day.
I personally hate gift cards and calling cards, but I think this suit needs to fail for several reasons:
1) The consumers that bought the cards paid for minutes. They did not deposit money on their cards, and minutes are not legal tender currency.
2) Many gift cards don't carry expiration dates. If the governments do this, it will force card issuers to put an expiration date on the cards.
3) Success in this litigation will embolden other governments that are looking for ways to close budget shortfalls without doing the fiscally responsible thing and cutting wasteful spending. Unfortunately, the first place where most governments choose to cut spending, instead of looking for waste, is in the school districts, police and fire precincts. Threatening cuts in those services makes it easier to justify doing stupid things like this, or raising taxes.
Let me stop you right there. You're already wrong in the second part of your basic premise. As far as the owner of a gift card or calling card is concerned, there's no account. They put money on a card, and thus as far as normal people are concerned, they perceive that the card has a certain dollar value. That card is in their possession on private property. Therefore these laws cannot legitimately be enforced against such monetary instruments. Allowing the government to confiscate money that backs these cards is no different than allowing them to confiscate the value behind an unused paper gift certificate, the stock behind a stock certificate, etc. It's completely absurd.
Further, to the owner's knowledge, there is no account number at a bank associated with it (despite the fact that we geeks know that it is basically implemented that way behind the scenes). This means that usually the owner cannot get cash out of these cards. Worse, the cards are generally anonymous, which means that there is no legal means for the owner to be notified about the government absconding with those funds or to reclaim them after the government takes them. In effect, this should be an illegal money grab.
On the flip side, those unclaimed property laws are the only recourse states have for preventing abusive practices like service fees on gift cards, expiration dates, etc. So in states where they are excluded from those laws, the public can still get screwed, just by the businesses instead of the government. What we need is an unambiguous federal statute that unifies the law on this matter, requiring that companies declare it as income only when the card is actually used (not exempting them from the unclaimed property law). It should also require that the card be maintained on the books indefinitely. It should require that these debts be repaid fully ahead of all other creditors in the event of bankruptcy. It should require that these funds be kept in a separate account and should prohibit any transactions to or from that account except for the transfer of funds related to the sale of or use of these cards. In short, we need real consumer protection laws instead of the hodgepodge of hacked together state laws we have now.
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