Delaware losing millions in unclaimed MoneyGram checks

Delaware’s ability to keep millions of dollars in unclaimed MoneyGram orders is coming to an end after a U.S. Supreme Court decision Feb. 28.

The case includes more than $10 million in unclaimed MoneyGram checks that Pennsylvania said belongs to its commonwealth since the checks were issued in Pennsylvania. Other states soon filed their own claims before the 30 cases were combined and presented to the U.S. Supreme Court. Each sought millions of dollars in unclaimed MoneyGram checks that previously had gone to Delaware under a long-standing practice. SCOTUS decided that unclaimed MoneyGram property should go to the state of origin instead of reverting to the state where the company is incorporated – in this case Delaware.

For years, millions of dollars in uncashed or unredeemed checks have reverted to Delaware’s coffers. The total amount owed to the 30 states could, by some accounts, reach $400 million.

Those states argued in court that unredeemed MoneyGram checks should go to them under the Federal Disposition Act, which requires abandoned property go to the state where the products were sold.

The U.S. Supreme Court agreed.

“The FDA provides that ‘a money order ... or other similar written instrument (other than a third party bank check)’ should generally escheat to ‘the state in which such ... instrument was purchased,’” the decision reads. “Delaware also has no theory as to why it matters to the escheatment rules that the statute adopts whether a financial instrument is or is not paid through a third party like MoneyGram. Thus, we are hard pressed to agree that ‘third party bank check’ means what Delaware says.”

The decision has implications for Delaware, which in its latest budget report included more than $500 million in unclaimed property. The Delaware Economic and Advisory Financial Council’s December 2022 report listed $554 million in unclaimed property collected for FY 2022, an amount that reduced to about $350 million after refunds were made.

Brenda R. Mayrack, state escheator/director of the Office of Unclaimed Property for the Delaware Department of Finance, said MoneyGram has not reported unclaimed property to Delaware since the lawsuit began. During the years when Delaware received unclaimed property from MoneyGram, she said, it may have totaled at most $20 million per year.

Footnote information provided in the SCOTUS decision notes: “According to the defendant states, Delaware took $250 million between 2002 and 2017 pursuant to the common law’s escheatment rules with respect to [MoneyGram checks] that were purchased across the nation, whereas, if the FDA applied, that state would have been entitled to only about $1 million.” 

A special master appointed by the court will now work out the details of unclaimed MoneyGram check returns, Mayrack said, and she expects it will be a lengthy process. 

“Now we go back to the special master to figure out the scope of this decision, how far back it goes, and what would go to which state,” she said. “The data is complex and there’s going to be a lot of back-and-forth and figuring this out.”