Mastering Escheatment Compliance: Best Practices and One Tool to Automate It All

Escheatment laws require companies to turn over unclaimed property to the state after a certain period of inactivity. 

Sounds simple. But, with so many jurisdictions, laws, customers, and asset types available, the entire process can quickly become a bottleneck. 

Here, we’re covering why you and other businesses struggle with this process. We’ll also provide our seven best practices to make sure you stay compliant. 

The Cost of Non-Compliance

Escheatment compliance isn’t an option. Failure to comply with escheatment laws can lead to significant financial consequences. 

For Example, in September 2024, California Attorney General Rob Bonta announced a $7.7 million settlement with U.S. Healthworks (USHW), a nationwide occupational and urgent care clinic chain. The settlement addressed claims that the company knowingly withheld over $1.5 million in unclaimed property from the state, including patient overpayments, violating both the Unclaimed Property Law (UPL) and the California False Claims Act (CFCA).

Under the UPL, companies are required to pay 12% annual interest on property that should have been reported or remitted to the state. The CFCA also empowers the Attorney General to pursue civil enforcement, which can result in treble damages and civil penalties. This case underscores the importance of adhering to escheatment laws to avoid costly settlements and penalties.

7 Best Practices for Staying Compliant

You might think you’re compliant… but are you? Are you hitting all your regulatory timelines, getting letters, reports, and remittances out when needed, and recording your process every step of the way?

If so, congratulations! You probably don’t need to read this article. However, if you’re questioning your escheatment coverage, walk through these seven steps and see if you have any gaps in your operations. 

1. Understand State-Specific Regulations

Diverse state regulations pose a significant hurdle. Each state has its own set of rules regarding dormancy periods, reporting requirements, and due diligence processes. Keeping track of these nuances is time-consuming and error-prone.

Each state has unique escheatment laws. Familiarize yourself with the regulations relevant to your operations. Refer to our comprehensive guide on Escheatment Laws by State for detailed information.

2. Maintain Accurate and Up-to-Date Records

Data management challenges can't be ignored. Companies often deal with large volumes of customer data scattered across multiple systems. Inaccurate or outdated records make it difficult to identify unclaimed property accurately.

Ensure that your customer data is current. Regularly update contact information to reduce the likelihood of accounts becoming dormant due to inactivity or outdated details.

3. Conduct Regular Due Diligence

Due diligence is an every-day practice. Implement a systematic and automated approach to identify and contact owners of dormant accounts while reporting on your efforts so that regulatory bodies know you are maintaining your end of the law. 

4. Implement Robust Internal Controls

Establish policies and procedures that define roles and responsibilities within your team. These should be clearly-defined, recorded, and updated regularly. Clear guidelines help prevent oversights and ensure consistency in handling unclaimed property.

5. Leverage Technology Solutions

Like any other data-driven process, cloud and automation tools should support escheatment compliance. These tools help you operationalize state regulations, streamline due diligence (through automation for processes like escheatment letter campaigns), and provide strong data recording and reporting capabilities. 

6. Train and Educate Staff

You must create a culture of compliance in your company. Invest in training programs to keep your team informed about the latest regulations and compliance strategies. Knowledgeable staff are your first line of defense against non-compliance.

7. Schedule Periodic Compliance Audits

Audit, audit, audit. This means auditing your processes, your policies, and tools to identify gaps in coverage and ways to improve the process in terms of accuracy and efficiency. 

Simplify Escheatment Compliance Across All States with Eisen

Navigating escheatment compliance doesn't have to be an uphill battle. Eisen offers a comprehensive solution that automates the complexities of the process, allowing you to focus on your core business activities.

Forecast Your Escheatment Liability Due to Each State

Eisen's platform provides real-time insights into your potential liabilities across different states. Forecasting obligations allows you to allocate resources more effectively and avoid unexpected penalties.

Track the Status of Every Active, Inactive, and Dormant Account

Stay informed about the status of all accounts with Eisen's centralized tracking system. Easily monitor activity levels and receive alerts when accounts approach dormancy thresholds.

Never Miss a Deadline Again

With automated reminders and a consolidated calendar of state-specific deadlines, Eisen ensures you submit all required reports on time. This proactive approach eliminates the stress of last-minute scrambles.

Ready to take control of your escheatment compliance?