New York Unclaimed Property - Proposed "Electronic Contact" Rule
The New York Office of Unclaimed Funds ("OUF") has published a new proposed administrative rule relating to “electronic contact” for public comment.
Under New York law, the dormancy period for abandoned property is generally terminated and reset by owner-generated “contact” with the holder. The OUF’s proposed regulation puts in writing something that most unclaimed property holders are already doing – equating various types of electronic events as owner "contact" for purposes of the Abandoned Property Law. The new regulation expressly provides that “[e]vidence of electronic contact or electronic account activity within the relevant dormancy period . . . can be cited to prevent the property from being deemed abandoned.”
The regulation also specifies two types of electronic contact that will suffice as such evidence: (1) the receipt of email from the account holder “that matches the registered email address on record” and (2) evidence that “the entitled account holder has accessed their personal account through the electronic method made available by the holder . . . .” (Vol XLIV N.Y. Register, Issue 9, p. 1 (Mar. 2, 2022)).
A few observations about the proposed rule. First, there is no provision for the non-return of email from the holder. In other words, while evidence of e-mail contact from the owner will be sufficient to stop the dormancy period, e-mail sent by the holder to the owner will not suffice (unless, of course, the owner replies). This is generally in line with the unclaimed property principle that “negative contact” (i.e., the termination of the dormancy period by the failure of an action to happen) is generally not permitted except in specially-defined circumstances (such as the non-return of account statements for some types of property).
Second, the e-mail rule presumes that the owner has an e-mail address that is “registered” with the holder. In other words, an email from the owner will not necessarily reset the dormancy period if the holder has no indication that the owner’s email is legitimate or correct.
The electronic account access part of the rule is reasonably straightforward. While there is no explicit requirement that the account access be pursuant to a password or other security credential, such a condition may be implied by requiring evidence that “the entitled account owner” was the one who accessed the account.
The public comment period is open until May 1, 2022.