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By Charlotte Keith | Spotlight PA
Pennsylvania’s treasurer wants the state to start sending unclaimed money directly to the people it belongs to, a proactive system that a dozen other states have adopted.
The state is currently sitting on more than $4 billion in misplaced money: the check you forgot to cash; the gift card you never got around to spending; the tax refund that was sent to your old address.
The money is swept into Pennsylvania’s coffers every year, and represents hundreds of millions of dollars that people have lost track of. But it doesn’t belong to the state: Its rightful owners can come and claim it anytime.
The current system for reclaiming that money, however, puts the burden squarely on the roughly one in 10 Pennsylvanians whose misplaced dollars the state is holding. To get it back, they must search for their name in a public database, then file a claim. But many likely have no idea there is money waiting for them in the first place.
State Treasurer Stacy Garrity wants to change that. Following the lead of states like Illinois and Wisconsin, she has proposed legislation that would allow the state to automatically return some money to people with no action required on their part.
All states have unclaimed property laws, which officials say protect residents by safeguarding missing money until it can be returned. Critics, including the financial institutions responsible for turning over unclaimed funds, have long questioned whether states are doing enough to reunite people with their money. After all, many residents aren’t hard for state governments to find: They pay taxes each year, update the address on their driver’s license, and register to vote.
Garrity said the state Treasury can often identify a current address for people who have unclaimed funds. But without a change in the law, it can’t send people their money back unless they file a formal claim.
A bill that would allow the Treasury to proactively return some unclaimed funds, introduced by state Sen. John DiSanto (R., Dauphin), was voted out of the Senate’s Finance Committee in early May with unanimous support.
“It’s pretty much a no-brainer,” DiSanto told Spotlight PA. “It’s a win for everybody.”
The proposed change wouldn’t apply to most of the money the state receives; only amounts under $5,000 with a sole owner who is still alive would qualify. In more complex or higher-value cases, people would still have to file claims. Unclaimed property owed to businesses, nonprofits, or local governments also wouldn’t qualify.
Still, for those eligible to get money back, the change would be profound: Imagine getting a surprise stimulus check in the mail — except the money has been yours all along.
Over the past five years, Pennsylvania has returned just over half of the money it collected, state Treasury data show.
Garrity’s proposal would result in only a modest increase in the amount of money returned, she estimated. The roughly $20 million more per year would amount to about 10% of what Pennsylvania returned in 2022. But with the average claim worth about $1,500, the bill could mean that thousands more people would get their money back each year, she said.
Here’s how it would work: Garrity’s office would verify an owner’s address, in some cases by cross-referencing other state databases, then send the person a letter telling them the state has their money. Unless that letter is returned as undeliverable, the state Treasury would follow up several weeks later with a check.
Illinois has been doing automatic returns since 2018, and it’s been a success, said G. Allen Mayer, chief of staff to Illinois State Treasurer Michael Frerichs. By 2022, the state had paid out just over $18 million in roughly 168,000 claims.
The overall dollar figure is relatively low, Mayer said, because many of the claims were worth around $75. But that money probably wouldn’t have been claimed otherwise, either because people didn’t know they were owed money, or they thought the process of filing a claim would be too time-consuming, he said. About 80% of the checks sent out are cashed and there have been no reported instances of fraud.
Wisconsin was the first state to return this type of money without requiring claims, starting in 2016. Since then, at least 10 other states have made similar changes.
“When you see the success of these programs, it’s easy to see why they are catching on,” said Jeremy Dawson, director of the National Association of Unclaimed Property Administrators.
Another reason states began to take a more proactive approach was a veiled warning from the U.S. Supreme Court, said Jennifer Borden, an attorney who specializes in unclaimed property.
In 2016, the court declined to hear a case challenging California’s unclaimed property law. Explaining that decision, however, Justices Clarence Thomas and Samuel Alito expressed skepticism about states’ efforts to return unclaimed property.
Some had changed their laws to reduce the length of time accounts had to be inactive before banks and other financial institutions were required to turn the money over to the state, the justices noted, but were not taking advantage of advances in technology that should make it easier to track down property owners.
For years, Pennsylvania was such a state. Unlike most states, Pennsylvania didn’t require financial institutions to notify people before sending their money to the state until 2016. The state didn’t join a longstanding national database of unclaimed property until 2021, after Garrity took office. And in a 2019 survey that examined how much unclaimed property states returned between 2013 and 2017, Pennsylvania ranked in the bottom quarter.
The survey, conducted by two groups representing financial institutions, found that most states returned less than 40% of the money they collected in that time period.
One factor in how much states return is the amount of information they receive from banks and other companies. Unclaimed property with names or Social Security numbers attached is much more likely to be successfully returned, the survey found.
Another factor is how much information states share with the public, said Borden, who testified on behalf of the two groups. The more information states make public in their unclaimed property databases, the more money they are able to return, she said.
Pennsylvania doesn’t show the exact value of unclaimed property online, only noting whether it’s more or less than $100. This is a longstanding department policy designed to prevent fraud, a Treasury spokesperson said. (Only California, Hawaii, and Texas display exact amounts.)
But the 2019 survey concluded that revealing exact amounts carried “no significant fraud risk,” Borden said in her testimony. “If you know what it is, you’re much more likely to go and claim it,” she told Spotlight PA.
You can find out if you have unclaimed property in Pennsylvania here.
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