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From the original wire article: > "AT&T's prepaid calling cards must be treated as unclaimed property under district law," the attorney general's office said i

From the original wire article: > "AT&T's prepaid calling cards must be treated as unclaimed property under district law," the attorney general's office said in a statement. More from the wire article: > According to the attorney general's office, that sum, known in the industry as "breakage," represents some 5 to 20 percent of the total balances purchased by consumers who use the calling cards. It's actually an interesting bit of case law insomuch as how the law applies to modern technologies, and if it IS in fact the case that AT&T has to turn the minutes over as unclaimed, a cash-strapped operation like D.C. would be crazy to leave the money sitting on the table.

NathanKP 17y ago
If this is established as a precedent though how far will it apply? Do ISP's have to turn unused internet bandwidth over to the government too? It doesn't seem feasible.
- allenp 17y ago
  I think the difference is that the calling cards are for a set number of minutes and a monthly internet service is just a on/off thing. The other thing I wonder about though is gift cards - I'm sure there have to be tons of dollars that expire on those all the time. Does the gov take a cut?
  - ams6110 17y ago
    I find it a stretch to say that unused minutes can be considered "unclaimed property". The cards basically are a contract where ATT will deliver up to X minutes of use within a defined time frame. That's really just a bandwidth agreement. What's next, will cable companies be required to rebate me for the hours of TV that I don't watch every day?
    - billybob 17y ago
      The TV example is different. The cable company doesn't sell you X hours of TV, it sells you 'as much TV as you want' each month. Whether you watch constantly or not at all, you got what you paid for. The calling cards are good for X minutes. Is it legal to expire those minutes? Seems like gift card sellers have been restricted in their ability to erode gift card value.
    - mbreese 17y ago
      What if there is no defined time frame? If you can buy minutes in the form of a pre-paid card, why wouldn't it be property? You could resell it. And it's a "pre-paid" card, not a "minutes contract". That makes it see that it is a stored cash-value card. The only difference is that the value is removed from the card in proportion to calling minutes as opposed to dollars spent. What about the case of airline points? Those are used almost interchangeably with cash. Hell, didn't American Airlines pay Citi in points once?
      - ams6110 17y ago
        Every pre-paid card I've seen has in the fine print an expiration date. If there are some that are totally open-ended, that does change the argument a bit.
        mbreese 17y ago
        Those expiration dates are quickly becoming illegal. I don't know how it applies to pre-paid minutes, but for gift cards, most states have eliminated expiration dates.
        billswift 17y ago
        I don't know about other systems, I use a Tracfone, and while I have to buy a new card every 3 months, the minutes roll over - I'm up to over 7 hours now.
- mschy 17y ago
  Escheatment isn't new. If you abandon a bank account, the bank escheats it to the state. If you then notify the state that they have your money (such as via http://ucp.dor.wa.gov/ http://ucp.dor.wa.gov/ ), then you can file a claim, and they'll give you the money. Phone cards are basically just (small) deposit accounts that are withdrawn against for one particular purchase. It makes a lot of sense that they'd fall under the same law. Your "slippery slope" example on the other hand doesn't seem to match, because ISPs charge a fixed price for daily access. They don't (currently) take a deposit and then debit that account based on usage. If they did, then it seems like it might fall under the same laws.
  - amalcon 17y ago
    A lot of them cap usage, though (at least officially). The phone card could just be structured as "$X for Y years of access, with a maximum total usage of Z" to get around this. It seems more likely that the difference is that cable companies usually bill later, whereas prepaid phones obviously bill up front.
  - chasingsparks 17y ago
    Escheatment may not be new, but this is certainly a poor application. Abandoned money in banks probably dwarfs that of calling card remainders. Claiming a few hundred dollars (or more) from a bank account is a good use of my time. Claiming $1.03 from my calling card is not a good use of my time. How exactly will D.C. redistribute the pre-purchased minutes to their rightful owners? My guess is they wont, which is why calling it a cash grab is appropriate.
  - Daniel_Newby 17y ago
    "Phone cards are basically just (small) deposit accounts that are withdrawn against for one particular purchase. It makes a lot of sense that they'd fall under the same law." No. Bank deposits are accounted for as money held in trust under a limited power of attorney, the total principal value must be reserved against by high-quality assets, and they are super-senior debt instruments that have priority in liquidation. The purchase price of phone cards is accounted for as income for the phone company, the cards are sold to provide a bearer service contract, they can discount the sale price to account for minutes that will not be used, reserves are whatever the phone company wants, and they are junior instruments that have low priority in liquidation.
jcnnghm 17y ago
DC is only cash strapped because of gross mismanagement and systematic corruption.
- mbreese 17y ago
  I don't see how that is relevant in this instance. It very well might be the truth, but I hardly find it relevant to this discussion. The question poised (does unused minutes on a calling card a) have value, and b) can be viewed as unclaimed property) is independent of the quality of the DC gov't. Sure, they might not be bringing this up if they had more resources (for whatever reason), but that doesn't necessarily taint the question.
  - jcnnghm 17y ago
    It's relevant because this amounts to nothing more than another cash grab. There would be no need for ridiculous new taxes like this if it weren't for the incredible mismanagement. And before someone asserts that it isn't a tax, keep in mind that the reason rates are where they are is because companies expect a percentage of the service to never be used. Rates will go up because of this.
    - mbreese 17y ago
      It's not a tax. :) I agree that companies price these cards expecting to be able to reclaim a certain percentage of the value of these cards. However, they are selling the entire value to the consumer. So if (and it's a big 'if') the unused minutes are unclaimed property, then gov't escheatment isn't a tax, it's reclaiming lost property on behalf of the consumer. The consumer paid for the entire value of the card, not the value of the card minus a bonus for the issuing company. Anything left over on a card should be treated as pure bonus to the companies, not a standard revenue source that needs to be recouped. If they do raise rates to recoup lost revenues, then it is the companies performing a cash-grab, not the gov't. This is why companies like gift cards and pre-paid minutes cards... they've been able to extract out the unused value from the cards for years, and it's all "extra" money that they didn't have to earn.

NathanKP 17y ago

If this is established as a precedent though how far will it apply? Do ISP's have to turn unused internet bandwidth over to the government too? It doesn't seem feasible.

allenp 17y ago
I think the difference is that the calling cards are for a set number of minutes and a monthly internet service is just a on/off thing. The other thing I wonder about though is gift cards - I'm sure there have to be tons of dollars that expire on those all the time. Does the gov take a cut?
- ams6110 17y ago
  I find it a stretch to say that unused minutes can be considered "unclaimed property". The cards basically are a contract where ATT will deliver up to X minutes of use within a defined time frame. That's really just a bandwidth agreement. What's next, will cable companies be required to rebate me for the hours of TV that I don't watch every day?
  - billybob 17y ago
    The TV example is different. The cable company doesn't sell you X hours of TV, it sells you 'as much TV as you want' each month. Whether you watch constantly or not at all, you got what you paid for. The calling cards are good for X minutes. Is it legal to expire those minutes? Seems like gift card sellers have been restricted in their ability to erode gift card value.
  - mbreese 17y ago
    What if there is no defined time frame? If you can buy minutes in the form of a pre-paid card, why wouldn't it be property? You could resell it. And it's a "pre-paid" card, not a "minutes contract". That makes it see that it is a stored cash-value card. The only difference is that the value is removed from the card in proportion to calling minutes as opposed to dollars spent. What about the case of airline points? Those are used almost interchangeably with cash. Hell, didn't American Airlines pay Citi in points once?
    - ams6110 17y ago
      Every pre-paid card I've seen has in the fine print an expiration date. If there are some that are totally open-ended, that does change the argument a bit.
      - mbreese 17y ago
        Those expiration dates are quickly becoming illegal. I don't know how it applies to pre-paid minutes, but for gift cards, most states have eliminated expiration dates.
      - billswift 17y ago
        I don't know about other systems, I use a Tracfone, and while I have to buy a new card every 3 months, the minutes roll over - I'm up to over 7 hours now.
mschy 17y ago
Escheatment isn't new. If you abandon a bank account, the bank escheats it to the state. If you then notify the state that they have your money (such as via http://ucp.dor.wa.gov/ http://ucp.dor.wa.gov/ ), then you can file a claim, and they'll give you the money. Phone cards are basically just (small) deposit accounts that are withdrawn against for one particular purchase. It makes a lot of sense that they'd fall under the same law. Your "slippery slope" example on the other hand doesn't seem to match, because ISPs charge a fixed price for daily access. They don't (currently) take a deposit and then debit that account based on usage. If they did, then it seems like it might fall under the same laws.
- amalcon 17y ago
  A lot of them cap usage, though (at least officially). The phone card could just be structured as "$X for Y years of access, with a maximum total usage of Z" to get around this. It seems more likely that the difference is that cable companies usually bill later, whereas prepaid phones obviously bill up front.
- chasingsparks 17y ago
  Escheatment may not be new, but this is certainly a poor application. Abandoned money in banks probably dwarfs that of calling card remainders. Claiming a few hundred dollars (or more) from a bank account is a good use of my time. Claiming $1.03 from my calling card is not a good use of my time. How exactly will D.C. redistribute the pre-purchased minutes to their rightful owners? My guess is they wont, which is why calling it a cash grab is appropriate.
- Daniel_Newby 17y ago
  "Phone cards are basically just (small) deposit accounts that are withdrawn against for one particular purchase. It makes a lot of sense that they'd fall under the same law." No. Bank deposits are accounted for as money held in trust under a limited power of attorney, the total principal value must be reserved against by high-quality assets, and they are super-senior debt instruments that have priority in liquidation. The purchase price of phone cards is accounted for as income for the phone company, the cards are sold to provide a bearer service contract, they can discount the sale price to account for minutes that will not be used, reserves are whatever the phone company wants, and they are junior instruments that have low priority in liquidation.

jcnnghm 17y ago

DC is only cash strapped because of gross mismanagement and systematic corruption.

mbreese 17y ago
I don't see how that is relevant in this instance. It very well might be the truth, but I hardly find it relevant to this discussion. The question poised (does unused minutes on a calling card a) have value, and b) can be viewed as unclaimed property) is independent of the quality of the DC gov't. Sure, they might not be bringing this up if they had more resources (for whatever reason), but that doesn't necessarily taint the question.
- jcnnghm 17y ago
  It's relevant because this amounts to nothing more than another cash grab. There would be no need for ridiculous new taxes like this if it weren't for the incredible mismanagement. And before someone asserts that it isn't a tax, keep in mind that the reason rates are where they are is because companies expect a percentage of the service to never be used. Rates will go up because of this.
  - mbreese 17y ago
    It's not a tax. :) I agree that companies price these cards expecting to be able to reclaim a certain percentage of the value of these cards. However, they are selling the entire value to the consumer. So if (and it's a big 'if') the unused minutes are unclaimed property, then gov't escheatment isn't a tax, it's reclaiming lost property on behalf of the consumer. The consumer paid for the entire value of the card, not the value of the card minus a bonus for the issuing company. Anything left over on a card should be treated as pure bonus to the companies, not a standard revenue source that needs to be recouped. If they do raise rates to recoup lost revenues, then it is the companies performing a cash-grab, not the gov't. This is why companies like gift cards and pre-paid minutes cards... they've been able to extract out the unused value from the cards for years, and it's all "extra" money that they didn't have to earn.