SouthernWorldwide.com – A few months ago, while browsing Colorado’s unclaimed property database, I stumbled upon a familiar name: my cousin Jonathan.
The listing was frustratingly vague, showing only his name, an old address, and the cryptic phrase “over $250.”
This could have meant anything from $251 to $2,500.
As it turned out, the actual amount was close to $30,000.
I shared the listing with Jonathan and largely forgot about it. Weeks later, he called, astonished and delighted. The money was real – a forgotten tax refund that had been held by the state for years.
His immediate question was understandable: How could I not have known about this?
The answer should be infuriating to every American.
The system, as it stands, is not designed to make this money easily discoverable or claimable.
That single phone call sent me on a deep dive into state records, audits, government databases, and public documents. What I uncovered wasn’t just a charming local story about lost cash.
It revealed what amounts to a national scandal, hidden in plain sight.
Across the United States, state governments are holding over $100 billion in unclaimed property. This vast sum includes forgotten bank accounts, old paychecks, uncashed tax refunds, insurance payouts, unused gift cards, abandoned securities, utility deposits, and funds owed to deceased relatives whose heirs were unaware of their existence.
New York alone is holding more than $20 billion. California has approximately $15 billion, and Texas is holding about $10 billion.
This is not government money. It is your money. It is my cousin’s money. It is your parents’ money, your deceased grandmother’s money, your former employer’s money, and your forgotten tax refund.
The government refers to it as “unclaimed property.”
I call it what it truly is: a tax on forgetfulness.
And states, it seems, are quite fond of it.
Officially, these programs are presented as consumer protection measures. The concept appears reasonable: if a financial institution or corporation owes you money and cannot locate you, the funds are eventually transferred to the state, which is meant to safeguard them until you claim them.
That is the theory.
The reality, however, is far less palatable.
Once these funds enter state custody, they become a quiet, readily available source of revenue. States utilize this money to cover budget shortfalls, finance various programs, and improve their financial statements. They hold private funds, often earn interest on them, and spend significant portions while awaiting claimants.
However, the majority of rightful owners never come forward because they are completely unaware the money even exists.
This is the core of the deception.
It’s one of the most insidious ways governments manage their finances. There are no tax increases, no outcry from voters, no damaging campaign ads, and no bills sent in the mail.
Instead, they simply take custody of money that people have lost track of, deliberately complicate the search process, make claiming difficult, and rely on the fact that millions will never appear.
In Delaware, unclaimed property has become one of the state’s primary revenue streams. In Virginia, this lost money helps fund teacher pensions, literacy programs, and law enforcement. Connecticut uses it to finance public election campaigns. Ohio officials have even explored using unclaimed property funds to contribute to the construction of a domed stadium for the Cleveland Browns.
Consider that for a moment.
Money that rightfully belongs to ordinary citizens can end up benefiting politicians, pension funds, police budgets, and stadium dreams, all while the rightful owners remain in the dark.
If a private bank engaged in such practices, regulators would intervene immediately.
When states do it, they label it as public finance.
And the games begin even before you attempt to file a claim.
Many states refuse to disclose the precise amount of money owed. Instead, they employ vague descriptions like “over $250.” This was the label associated with my cousin’s claim, making a nearly $30,000 tax refund appear as a minor, insignificant errand.
This is not a trivial detail; it significantly influences people’s actions.
If you believe a claim might be worth $12, you might easily dismiss it. However, if you know it’s worth $12,000, you would likely go to extraordinary lengths to retrieve it.
States are well aware of this psychological effect.
Some states go even further. New Jersey does not publicly list claims below $100, despite the fact that these smaller claims collectively amount to hundreds of millions of dollars. Michigan has kept claims under $50 out of public view. In North Dakota, a state audit revealed that searches for claims of $10,000 or more could return “no results found,” even when such claims actually existed.
Let that sink in.
You could search for your money, be informed that there are “no results,” and still have thousands of dollars held in government custody.
Then there’s the paperwork.
Even after individuals locate their money, the process of reclaiming it can become a bureaucratic maze. Some claims necessitate notarized forms, mailed documents, death certificates, probate records, old identification, proof of address, and layers of paperwork that seem intentionally designed to discourage claimants.
Yes, states need to prevent fraud. No one wants to see scammers successfully drain legitimate claims.
However, there is a significant difference between protecting individuals and exhausting them through an arduous process.
Every additional form required, every vague database entry, every missing dollar amount, every document that must be mailed, and every notarization requirement increases the likelihood that someone will simply give up.
And when people give up, the state retains the money for longer periods.
This highlights the inherent incentive problem at the heart of the entire system.
The more difficult it is to claim the money, the longer it remains with the government. The longer it stays with the government, the more valuable it becomes as a resource. The more useful it becomes, the less motivated politicians are to implement systemic reforms.
This is precisely why seemingly positive television segments, such as ABC’s “Show Me The Money,” are so bothersome to me.
You have likely seen them. An anchor announces that a viewer has successfully located $500. A state treasurer, or one of their representatives, beams for the camera. Everyone celebrates the government for returning someone’s money.
However, this is akin to applauding a person who borrowed $100, returned $3, and then demanded a medal for their generosity.
New York proudly states that it returns millions of dollars daily. What it less frequently mentions is that it still holds over $20 billion. Nationally, states return only a small fraction of the funds they hold each year, while the total amount accumulated continues to grow.
This is not a sign of success; it is a failure presented with effective public relations.
And the situation becomes even more problematic.
Some states retain the interest earned on your money. California, for instance, imposes substantial penalties on companies that fail to remit unclaimed money promptly, yet offers no interest to rightful owners whose funds are held by the state for years.
Therefore, the state can penalize companies for tardiness, hold your money, profit from it, and then return only the original principal amount to you.
It’s a rather advantageous arrangement if you can manage it.
This is not merely an abstract consumer issue; it disproportionately affects those who can least afford such hardships.
This includes individuals who relocate frequently, retirees, families managing estates, workers who have changed jobs, people who have lost a parent, and those who have faced medical bills, dealt with old insurance policies, or had forgotten refunds or closed bank accounts.
The average claim often represents a significant sum. While some claims are minor, others are substantial. In 2022, Illinois agreed to pay $11 million to the heirs of Joseph Stancak, a Chicago man who passed away without a will.
The lesson is clear: the money is real.
My cousin’s nearly $30,000 was indeed real.
However, the system is designed to make people assume that checking is not worth their effort.
This is why reform is finally gaining traction. Massachusetts Democrat Sen. Elizabeth Warren has formally requested information from state treasurers. Members of Congress have introduced legislative proposals for reform, and hearings on the matter may be forthcoming.
This is a positive development.
However, the solution does not require an extraordinary undertaking. It demands basic honesty.
States should publish exact dollar amounts for all unclaimed properties. They should list every claim, regardless of its size. They should cease hiding behind vague value ranges. They should leverage tax records and other government databases to automatically match individuals with their rightful funds. Claims should be simplified and digitized. States should pay interest when they earn interest on these funds. And their success should be measured by the amount of money they return, not by the amount they hoard.
Most importantly, states must stop portraying this money as a free resource.
It is not.
A forgotten tax refund is not a budgetary tool. A widow’s insurance payout is not a discretionary fund. A deceased individual’s bank account is not a source for stadium financing. A worker’s old paycheck is not government revenue.
It is private property.
My cousin was fortunate. I happened to search at the right time. I happened to recognize his name. He happened to follow through with the claim. A vague listing of “over $250” ultimately resulted in nearly $30,000.
However, luck should not be the defining factor of the system.
The government claims it is holding this money on our behalf.
Very well.
Then return it.
Because unclaimed does not equate to unwanted. And forgotten does not mean forfeited.
