Giannoulias bill protects consumers against "finder" firm fees

Legislation to assist consumers in recovering unclaimed property free of charge

March 17, 2008

Illinois State Treasurer Alexi Giannoulias is introducing a consumer protection bill that will prohibit companies from charging outrageous fees for reuniting Illinois residents with their own unclaimed property, something they can do themselves for free.

These so-called “finder” or “tracer” firms try to locate the owners of lost Illinois bank accounts and other funds before they are turned over to the Treasurer’s Office and listed on its free, searchable, online Cash Dash database.

Under current law, finder firms are not required to provide any details about the lost funds – such as the amount or location of the money – and are known to charge up to 50 percent of the amount to return it, Giannoulias said. In many cases, finder firms wrongly imply that if the consumers do not act immediately, they will lose any chance of recovering their cash.

Finder firms typically solicit consumers by phone, postal mail and e-mail during the five-year period before businesses and financial institutions are obligated to turn over lost, abandoned and forgotten funds commonly known as “unclaimed property” to the Treasurer’s Office for safekeeping and distribution, Giannoulias said.

“These firms scam consumers by demanding a fee but never disclosing who has their money, which makes it impossible for the rightful owners to track it down themselves,” Giannoulias said. “They’re essentially saying, ‘There’s a pile of money that is owed to you but the only way you’re going to see a nickel of it is by paying us.’ It’s a no-win for consumers.”

Giannoulias’ proposed legislation would:

• Require finder firms to disclose in writing the name of the institution holding the unclaimed property to make it easier for consumers to find.
• Place a 10 percent cap on the fees that a finder company can charge, even if the property has not hit the statutory abandonment period of five years. (Currently there is 10 percent fee limit only on abandoned property that has been in the possession of the State Treasurer’s Unclaimed Property Division for a minimum of two years. In many cases, finder firms solicit consumers to locate unclaimed property before it gets turned over to the state, which allows them to charge a higher percentage. This cap would close the loophole.)
• Require finder companies to include that the Treasurer’s Office does not charge fees for recovery of any unclaimed property.

The bill is also designed to alert homeowners who mistakenly overpay their property taxes. Often times, mortgages are transferred among mortgage companies, resulting in a double payment. Although the overpayments are reflected in subsequent tax bills, homeowners often overlook the notice. After five years, that money is collected by the county and the property owner is unable to retrieve it.

One of bill’s sponsors, State Sen. Don Harmon (D-Oak Park), received a letter last summer from a finder firm that sought to charge him 50 percent of what he was owed.

“The written solicitation that I received created the impression that I might lose my money if I didn’t quickly retain the finder firm, offered what I would consider to be misleading references, and included a contract assigning 50 percent of any amount recovered to the finder firm,” Harmon said.

“In subsequent telephone calls, representatives of the company only added to the veil of mystery,” he continued. “Illinois residents have a right to know how they can retrieve their unclaimed property for free and not be stuck up by for-profit companies trying to take advantage of a wrinkle in the current law.”

The bill’s other sponsor, State Rep. Harry Osterman (D-Chicago), noted that finder firms often prey on seniors and employ scare tactics to get consumers to pay.

“Consumers should not be bullied into having to pay a third party to retrieve money or property that is rightfully theirs and claimable free of charge,” Osterman said.

Giannoulias recommended consumers find out if they are owed unclaimed property by following the Cash Dash link on the Treasurer’s website, www.treasurer.il.gov, and typing in their name. He also suggested that consumers keep their information current and contact the financial institutions they do business with to verify that their accounts are active.

Since taking office last January, Giannoulias has made it a priority to reunite more Illinois consumers with their unclaimed property. In fiscal year 2007, the state returned a record $92 million to almost 50,000 residents and businesses.

Last month, Treasurer’s staff helped return a record $1.2 million in proceeds from liquidated stock and related dividends to a North Shore woman. The woman, who asked not to be identified, lost track of the investment because the stock’s annual report was not forwarded to her new address after a move.

“The bottom line is that you should not pay a third party to retrieve unclaimed property,” Giannoulias said. “Unclaimed property that ends up in our office will come back to you free of charge, regardless of how long the state has held it.”