D.C. to AT&T: All Your Unused Minutes Are Belong to Us | Hacker News Reader

D.C. to AT&T: All Your Unused Minutes Are Belong to Us

reason.com

31 pointsmiked26 comments

If you're surprised by this legal requirement, see here: http://www.bankrate.com/brm/news/cc/20060127a1.asp

This was almost a pain point for me when I thought of offering rebates the first time ("Buy today and get 10% back"), since some states require unclaimed rebates to be escheated. It turns out that the service I was thinking of using (RebateDelivery) handles this nonsense for you.

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.

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.

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?

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?

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.

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?

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.

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.

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.

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/ ), 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.

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.

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.

"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.

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

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.

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.

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.

That's like saying I hit closing time while I was at the video arcade playing Pac-Man so the government should be able to take the remaining cash value of my quarter for the unconsumed pac-dots, even though my game ended. The minutes are a temporal good, only valid within a timeframe. There is no remaining value to escheat, because they are expired.

That might very well be the case that gets argued, though note that expired gift cards can also be reclaimed by the government. A quick read of the link posted by patio11 suggests that states may declare that gift cards should have no expiry dates, perhaps they could force a similar ruling onto pre-pay call cards.

Clearly there is enough grey space to go to court about it.

It just seems to fail a very simple test of allowing the government to steal money from any one that offers any thing that has an expiry. To take it out of the virtual world- can the government escheat from a restaurant the remaining value of food at a buffet restaurant where you are allowed five trips to the buffet but only use two? The expired items have no value, so there is nothing to escheat.

It's true that they could declare a law against expiry, but that would seem to be a completely separate case.

It's not a tax, and it's not new. It has its basis in common law that goes back nearly a millenium: http://en.wikipedia.org/wiki/Escheat. Also, DC is not the only state that follows this doctrine.

Not saying there isn't gross mismanagement and systematic corruption, but not being a state also puts DC at a serious disadvantage. They don't have access to state funds, or any government programs that only work through states (though many government programs working through states do make a point of including DC, not all do). Also, they lose out on a lot of corruption not having senators at all. Senators regularly ship large amount of pork back to their state. No senators, no pork.

A large city in your average state can get away with a lot more corruption and mismanagement than DC could. They'd have state government, certain national programs, and national representatives to fall back on. DC gets none of that.

On the other hand, given the amount of time they spend in the area, and their dependency on the federal workforce in DC, to some degree every other Senator and Representative looks out for DC's interests. DC has plenty of de facto power to get pork, even without the de jure representation.

Spending time in DC does not equate becoming a resident of DC, nor does it posit in one a sense of ownership necessary to take care of DC. This is especially true when the part of DC these senators et al live in is not representative of DC as a whole: DC does a very good job of fencing off the haves from the havenots (e.g. no metro stop in Georgetown).

Link to the actual article http://us.mobile.reuters.com/mobile/m/AnyArticle/p.rdt?URL=h...

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