CBA Publications >> CBA Regulatory Compliance Bulletin >> Vol 2002 No.20 November 26, 2002

Vol 2002 No. 20 November 26, 2002

Bill Requires Clear and Conspicuous Escheat Notices

AB 1772 modifies the notice requirements under the state's Unclaimed Property Law (UPL, codified in the Code of Civil Procedure Sections 1513.5, 1516, and 1520) in order to make them more noticeable. The bill's author asserts that the current notices required of financial institutions and other holders do not sufficiently alert account and property owners that their accounts and assets are about to be transferred to the state. The author also cited that as financial institutions continue to engage in mergers, consumers are more likely to lose track of their accounts.

Under existing CCP section 1513.5, a financial institution is required to send a notice of escheat either (i) between 2 to 2-1/2 years after the date of last activity in the deposit, account, shares, or other interest (hereafter, "account") or communication with the accountholder about the account, or (ii) between 6 to 12 months before the account becomes reportable.

AB 1772 specifies that this notice must be printed in bold or in a font that is at least two points larger than the rest of the notice. It must also specify (i) that since the date of last activity, or for the last two years, there has been no customer activity on the account; (ii) the identity of the account by number or identifier; (iii) indicate that the account is in danger of escheating to the state; and (iv) specify that the UPL requires the institution to transfer funds of an account if it has been inactive for three years. Similar changes are made with respect to abandoned shareholder interests and personal property.

The bill has a delayed effective date of January 1, 2004. If you have any questions, you may contact James Clark, the lead lobbyist on this bill at 916-441-7377 x209.