Firm charges fee for refund data you can get free

A letter received by Judy Damico from something called the U.S. Claims Services said that “private investigators” had located $398 that the insurance giant WellPoint had unsuccessfully tried to refund to her.

For a fee of $38.95, the official-sounding U.S. Claims Services said, it would obtain the money from a mysterious “third-party escrow account” that apparently only its financial detectives could locate.

Jacob Roper, a spokesman for California Controller John Chiang, laughed when I shared the part about the escrow account.

“We’re that third-party escrow account,” Roper said. “And we’ll give her the money for free.”

One of the jobs of the controller’s office is to collect unclaimed money and property and make it available to the rightful owner.

I’ve written before about companies like U.S. Claims Services that scour public databases in search of so-called escheated funds — money that’s gone unclaimed — and then charge a commission to serve as go-between in getting the cash.

But you have to admire the chutzpah of U.S. Claims Services in attempting to pass off the controller’s easily accessed, free-of-charge online database as a “third-party escrow account” — as if tracking down the money required the financial savvy of a forensic accountant.

Damico, 70, forwarded me the company’s letter because she wasn’t sure what to make of it. If it was legitimate, the Whittier resident said, she wouldn’t hesitate to pay $38.95 for $398 in long-lost funds.

“I don’t think this was sent by a state agency,” Damico said. “But it’s hard to tell.”

That seems deliberate. U.S. Claims Services, based in Bakersfield, never claims official status but it prominently declares that it’s “licensed and regulated” by the California secretary of state.

It’s not.

“The secretary of state’s office does not license businesses, and we are not a regulatory agency,” said Shannan Velayas, a spokeswoman for Secretary of State Debra Bowen. “We are a filing agency.”

I ran a search of business licenses on file with the secretary of state’s office. Guess what? There was no listing for U.S. Claims Services.

The California business entity number on U.S. Claims Services’ website showed that the company’s true name is New Concepts Development Inc., which did turn up in the secretary of state’s records.

Among various other businesses also claiming the same Bakersfield address was National Claims Recovery Services and MyMoneyMonitor.

A fellow named Aaron Hashim runs all these companies. He told me he operates under different business names in different states.

“We got into it to help people recover money they didn’t know about,” he said. “We get thousands of thank-you letters.”

Chatting with Hashim, you get the sense he believes he’s performing a public service and not merely cutting himself in for a piece of other people’s cash.

“A lot of people are glad we spend the time and money to track them down,” he said.

That may be true, but it doesn’t excuse false or misleading marketing tactics. Hashim acknowledged that many people pay a fee to his companies because they have no idea they often can get their money themselves for free.

When I pointed out that the secretary of state doesn’t license or regulate his or any other company, he admitted this was “a poor choice of terminology” and said he’d stop making such a claim in his company’s letters.

Hashim also acknowledged that the letter received by Damico deliberately didn’t tell her where her WellPoint refund could be found.

“If we told people where to go, we’d never get a call back,” Hashim said.

And there’s a good reason for that: No one in their right mind would pay a private company to perform a relatively simple task that anyone could do for nothing.

Yes, Hashim performs a service by locating funds that people may not know about. But his business model rests almost entirely on giving clients the false impression that they can’t get the money without his help.

“I realize how our letters come off,” Hashim said of his pitch for a 10% commission. “I wish we could do this for free, but we can’t.”

Chiang, the state controller, said it’s fine for people to hire professionals to seek out unclaimed property.

“But withholding information about being able to claim the property directly from the state robs consumers of an inexpensive option,” he said. “I believe that these solicitations can do a great disservice to consumers.”

Chiang’s office is currently holding about $7 billion in unclaimed funds. If a piece of that pie belongs to you, claiming it is easy.

Just go to the “unclaimed property search” page on the controller’s website, enter your name and city, and click away.

A search for Damico’s name turned up not just the $398 refunded by WellPoint but also about $10 in stock dividends from several companies.

Claiming the cash requires only that she submit a little additional information, including her Social Security number, which is necessary to prove that she is who she says she is.

A couple of years ago, legislation was introduced in Sacramento that would have required all solicitations from companies like U.S. Claims Services to include where exactly the unclaimed property could be found, rather than a vague reference to a “third-party escrow account.”

Chiang said the bill died after intense lobbying by unclaimed-property companies.

Seems to me this legislation would have introduced greater honesty and openness to the market and allowed consumers to make informed choices about their own funds.

Those are goals worthy of another try by lawmakers.

David Lazarus’ column runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5 and followed on Twitter @Davidlaz. Send your tips or feedback to [email protected].