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This case is one of those interactions between something very ordinary and something most of us have never heard of. No, it's not Balloon Boy again. Have you ever wondered what happens to the balances on those pre-paid phone cards that just never get used? The D.C. Attorney General has evidently spent a little time thinking about it and now is going to spend a little more time in court about it.
In the last week of December, D.C. Attorney General Peter J. Nickles filed suit against AT&T to claim that the unused balances on phone cards belonging to individuals whose last known address was somewhere in D.C., belongs to the District under the law of escheat. "AT&T's prepaid calling cards must be treated as unclaimed property under district law," the attorney general's office said in a statement.
This is the part very few of us are familiar with. The law of escheat is a common law doctrine that dates back to the medieval era, when all unclaimed property would revert back to the power of the local feudal lord. In a slightly more modern context, property can escheat to the state when a person dies without a will or heirs that can be located, or if a bank holds property or money that is unclaimed. Under these circumstances, the money and property escheats to the state.
Jumping back to the current day, the amount left hanging around on those calling cards, known in the industry as "breakage," can amount to as much as 5 to 20 percent of the total balances purchased by consumers who use the cards. "You're talking about a lot of money," said Gene Retske, who worked for AT&T for 20 years and is now editor of Prepaid Press, a trade publication. "You buy a card for a trip. Your trip gets canceled. You throw it in drawer and just forget about it."
No doubt any amount of extra income would be welcome in the District budget, which like so many others, is strained by the tough times. At this time, AT&T has not commented on the suit.
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