Licensed and Registered across the U.S.
There are over $70 billion dollars of unclaimed funds in America. GovRecover aims to solve this problem.
Every year companies across the U.S. are required to report and transfer dormant accounts to states and counties. The only action these holders must take is to send a letter to the address they had on file with the claimant. This presents a massive issue: how are individuals contacted if the letter is not received, and who is actually incentivized to return it?
Before we examine what GovRecover has accomplished, we must examine the problem of unclaimed funds.
The chart above shows the increasing amount of money held in the unclaimed property reserves of Texas. The ratio of returned money remains, while the amount collected is steadily increasing. Every year the unclaimed property reserves get backlogged more and more. Unfortunately, this isn’t just a Texas problem - it’s a nationwide issue.
Companies have no incentive to return the money to their customers. Their only legal obligation is to report the property to the state. After reporting, they are off the hook and do not need to spend resources on finding their customers.
The state is not incentivized as it has fulfilled its legal obligation to send a single letter to the address on file. After sending that notice, they are also off the hook.
The state uses the money for state programs. (See fig 2 below)
The state uses unclaimed property to fund state programs. As states lack funding in various spaces, the vast amount of money will never be returned. But returning the money presents a conflict of interest, losing a large part of the funding, or keeping the escheated funds and having a larger fund for state programs?
In the case of returning the money to claimants and rightful heirs, private investigative manual labor needs to happen. If a claimant moves addresses, there are only a few possibilities for reconnecting those funds.
All the above methods require vast amounts of time, research, and resources. Furthermore, it’s very costly. If neither the state nor companies are on the hook for it… who is?
The answer: Neither
Now, let's look over massive issues in the unclaimed property records to better understand the challenges at hand.
Many states do not allow claimants to search by address or specific necessary records. They allow for search only by city (some have abbreviated names), first name, and last name. If an individual has a common name, countless records show up. This makes determining ownership difficult. Many parents pass down the same name (James Johnson Sr, Jr the III), and the claim may be for either family member.
Much of the data reported lacks complete names. Often only including a first name. Many records show as “null” for the full address information. This means the holder did not have the customer's full contact information.
Furthermore, manual entry means many names are misspelled. Even cities, such as “SAND DIEGO” instead of San Diego, are seen in the dataset. Over 1 million records lack an address in the CA unclaimed property database.
In the example above, let’s say one were to search their name & city properly; regardless, the claim wouldn’t show.
How can claimants be tracked down if basic typos are present?
The largest claim in the California database currently shows up as UNKNOWN. Exceeding 5 million dollars in value. One would think that five million dollars is impossible to lose, but with very generic reporting, it happens.
Often, states have overwhelming burdens of proof to process a claim. Such as the original check lost or mail with an address from 10 years ago. If one could never cash a check for over a decade, how could they supply it as proof? Who keeps an old electricity bill from their old address from 20 years ago? The claims never get successfully processed and stay with the state.
Funeral bills, probate documents, SSN cards, and multiple unrelated claimants signing together further complicate the process. The forms can be tricky as only a certain amount can be split. Asset recovery services deal with these issues daily, but it's never easy.
Another massive hurdle is requiring other companies to cooperate to process the claims. Often, a bank must provide proof for the case to continue. If the company does not cooperate, the claim will not proceed. Furthermore, in some cases, the funds are not split; only one claimant gets it all.
Another hurdle preventing money from being returned is the lack of state cooperation. In New York, the claim amounts are not publicly available. They claim this is due to combating “fraud.” Meanwhile, states like California have shown all their records publicly for over a decade without issues. The burden of opening up states means that they need to hire more employees. Then more efficient systems are needed to return the money. In reality, NY’s statement of preventing full access to the unclaimed property information prevents money from being returned.
In most states, there is a limit on the value of a claim without going through court proceedings. For example, a parent can become deceased, and they have a $100k in inheritance in unclaimed property. The heirs commonly do not have the capability to claim that money without a large financial burden. The probate proceedings often take up to a year and are very costly. In many cases, the heirs do not have upfront money to go through those proceedings, leaving that money with the state forever. Many states do not have small estate affidavits specific to the unclaimed property laws.
Some states open up third parties to reconnect the funds. The burden of research lies on asset recovery services like GovRecover. This presents another essential factor, which is trust.
A very common question: Is this legitimate? Is this a scam? Understandably being contacted by a third party claiming that you have $50,000 for 15 years ago is hard to believe. The brunt of expenses incurred is solely the asset recovery firms.
GovRecover faced many challenges of similar asset recovery firms as a newer firm. It could piece the puzzle by focusing primarily on incomplete records and older entries.
One of the key focuses is to compile a variety of techniques for combining AI tasks. One such focus is to fix common spelling errors by running them through APIs for known words. The AI can identify errors in the data and fix abbreviations. Scripts / APIs are also utilized to find out if there is a foreign address on file, meaning a much more manual direct approach is preferential. “We use mapping software to determine the type of address, residential, hospital, or closed business,” Ricky states. Essentially “bucketing,” the types of claims can be grouped into several strategies.
There are millions upon millions of records, far too many to attempt to notify without differing procedures. Without automation and consistent workflows, this task would be impractical.
Although software is a huge plus, having a great team capable of handling the complexities of a larger volume of claims is essential. “Everyone on our team is trained on every property type, state, type of claim, and document needed. You need to prioritize training and focus on the customer.”
GovRecover received 500k in investment, which Ricky (co-founder) stated was used primarily for researching individual claims. “Our primary focus is to fill in the gaps left out by the reported data,” he states. Automation and AI are helping us scale up operations.” We aim to return much more.”
GovRecover connected over $11 million to Americans over six months through automation. An additional $5 million was estimated to be returned through spreading awareness. “It was definitely a hustle, and my goal was to process and return $10 million in 6 months, so it’s safe to say we definitely surpassed it” — Ricky.
Our Team. Conor McKenna, Ricky Maldonado, Mary Milton. We are licensed heir finders and state funds locators. We work…
Increasingly, the need to open up states and educate the vast American public on unclaimed properties has become a larger mission. Although hiring PIs or leveraging AI might be helpful, legislation is the largest factor. Software is only as great as the data available. The state's largest issues are private databases, improper reporting, unnecessary proof, and probate courts.
“We aim to return a billion dollars in the next few decades.” — Ricky
The primary mission is to spread awareness to the general public of the massive reserves of money held by states. This money is not forever lost; it's still owed to around 30 million Americans. GovRecover aims to innovate and spend much of its budget on expanding outreach and legislation.
“We hope mainly to educate and notify as many Americans as possible; only then may the laws change.” — Ricky