The Minnesota Department of Commerce and the Wisconsin Department of Financial Institutions have jointly entered into a consent agreement with American Accounts & Advisors, Inc., related to how the agency handled unclaimed funds. Separately, the Minnesota Department of Commerce fined five separate collection agencies for failing to provide the “mini-Miranda” warning as required under the Fair Debt Collection Practices Act.
The news was first reported by the law firm of Barron & Newburger.
The collection agency agreed to pay a civil penalty of $200,000, but $125,000 of that will be stayed if the agency follows the required steps to reform its procedures and if it complies with all of the steps set forward in the order.
Handling unclaimed funds generally falls under what are known as escheat laws. Originally the laws dealt with individuals who died without heirs and how their property was dispersed, but today refers to how unclaimed funds are handled by organizations. The agency was required to conduct an audit and follow a series of standard protocols to handle unclaimed funds.
“Industry members should see this as the warning shot that states are starting to look at how they handle unclaimed funds,” Barron & Newburger warned. “This is an area that may not always be considered by industry members as essential to a sound compliance management plan. To avoid this sort of regulatory reaction, a state-by-state analysis of unclaimed funds statutes is a necessary part of a collection agency’s compliance program.”
