D.C. to AT&T: All Your Unused Minutes Are Belong to Us

Sunday, January 3rd, 2010

Washington, D.C. is suing AT&T because some customers who buy its prepaid calling cards don’t always use up all the minutes. The city isn’t suing on behalf of the customers, of course (though even that would be sort of silly). It’s suing on the notion that when a customer doesn’t use up all of a product or service they purchase, the remainder belongs to the government. So they want the company to pay what the minutes are worth to the D.C. government, where they might be better used on, oh I don’t know, maybe to pay overtime for Mayor Adrian Fenty’s mountain bike detail.

Next up, D.C. sues Burger King for stray fries that go uneaten after falling to the bottom of the drive-thru bag.

Digg it |  reddit |  del.icio.us |  Fark

16 Responses to “D.C. to AT&T: All Your Unused Minutes Are Belong to Us”

  1. #1 |  Nick T. | 

    Those fries are the best!

  2. #2 |  bobzbob | 

    When you place a deposit with a bank, and then fail to claim it (say you die), the ownership does not revert to the bank, but to the public (as embodied by the government). Is there a compelling argument that phone card balances should be treated any differently?

    Escheat laws were enacted to fix the problem of commercial organizations profiting by making it difficult for depositors to reclaim goods to the point that some percentages were abandoned – THe law removed the incentive to behave in this fashion.

  3. #3 |  ClassAction | 

    Escheat laws governing the ownership of “lost” or “abandoned” property are actually fairly common, although I’ve never heard of it being applied to unused cell phone minutes (although since they have a cash value, I can’t say I’m surprised). Unsurprisingly, many states feel that they own lost/abandoned property and will force businesses to fork over to them the unused cash value of expired gift cards. Large retail companies then incorporate a subsidiary company that provides their gift cards in stated without escheat laws to try to escape this.

    Basic article about the model: http://www.bankrate.com/brm/news/cc/20060127a1.asp

  4. #4 |  ClassAction | 

    #2:

    Well, frankly, I don’t think the government represents the “public” or that abandoned money belongs to either the “public” or the government; abandoned property rightly belongs to the first person to lay possession to it. In the case of gift cards, (or phone minutes that you haven’t used) where you are essentially paying a company up front for goods that you will lay claim to in the future, I actually don’t think there’s anything “abandoned” at all. If you fail to take possession of something you’ve paid in advance for, your money isn’t abandoned – it belongs to the company you’ve paid up front for a product or service, and the product or service isn’t abandoned either – it still belongs to the company that you haven’t claimed it from.

  5. #5 |  Bob | 

    “…Large retail companies then incorporate a subsidiary company that provides their gift cards in states(sic) without escheat laws to try to escape this.”

    Is this why virtually every financial company has it’s ‘headquarters’ in Wilmington, Delaware? I wanna go there and see that… I expect to see block after block of tiny temporary buildings.

    My initial reaction was “Boo on DC!” … and it still is… but I see the need for Escheat laws. Look at ‘mail in rebates’, they’ll do anything to make it hard for you to claim your rebate.

    Left without regulation, the market will conspire to screw you. Adam Smith’s ‘invisible hand’ of beneficial self regulation ceases to be a factor as businesses merge and automate.

    This is why an unregulated free market will never work.

  6. #6 |  ClassAction | 

    #5:

    Well, I guess you live in a reality where big government is necessary to stamp out the uncontrollable scourge of mail in rebates, but frankly, it’s pretty much a non-issue as far as I’m concerned. Nor do I see any horrendous discrepancy in the business practices of companies in states where there are strict escheat laws vs. minimal escheceat laws. Frankly, there’s a pretty simple market solution for dealing with companies with restrictive gift certificate policies (most of these have been stamped out by federal regulations) — DON’T BUY GIFT CERTIFICATES (and use your rollover minutes!). Pretty simple.

  7. #7 |  Dodd | 

    “It’s suing on the notion that when a customer doesn’t use up all of a product or service they purchase, the remainder belongs to the government.”

    Millions of starving Chinese hardest hit.

  8. #8 |  Windy | 

    If a customer has paid for something they have not yet used, IMNSHO, the unused things still belong to the customer, not the government and not the company. If a person dies before they get the opporunity to use the (gift card, minutes, product, service, etc.) that unused item belongs to the heir(s) of the deceased.

    Another thing government does that burns me up is taxpayers pay taxes to provide Medicare/Medicaid, when someone goes into a rest home and then uses all their liquid assets up in that care before they die, the state (via Medicaid) pays for the rest home care until the person leaves or dies — OK, our taxes are supposed to cover that. However, once the person in the rest home dies, if there is still a home owned by that person, the state will put a lien on the home for the amount Medicare paid to the rest home. Since taxes are supposed to pay the Medicaid, how does the state figure they are leagllay allowed to take that money from the heirs, too? The heris end up paying twice for the sme “service” in taxes and in the lien. Highway robbery, is it not?

  9. #9 |  Windy | 

    Frigging typos, when will I learn to write in an email box to see and get errors corrected, and THEN copy/paste it to the comment box?

  10. #10 |  ClassAction | 

    #8

    I wonder… I’m really not sure there’s a compelling libertarian justification for the automatic post-death transfer of a person’s property to others. There is, I think, absolutely NO legitimate justification for intestacy laws. Absent an expression of intent by the decedent property owner, there isn’t any justification whatsoever for heirs to take anything. But more troubling still, even if there is a will, I can’t really find any particularly compelling justification to allow a dead person’s wishes to justify the transfer of property. Once a person ceases to exist, I just don’t see how they have any legitimate claim to their property – even to determine where it goes.

  11. #11 |  Granger | 

    #10

    Agreed as to your first scenario.

    As to the second, the standard libertarian moral justification for transfer by will is pretty simple. Start with natural law theory of property. If I hold title to X, I have the right to convey title to X to whomever I wish. If you bring up the timing of the transfer, here, the testator’s death, you will probably end up with “well, who else should direct the disposition of the property?”

    Unsatisfying, yes, because the timing is all-important. My will does not convey title so long as I am alive, and I can change it or even revoke it at any time. So analogizing to contract gets you nowhere. A will is not enforceable until the death of the testator, but once he dies, he doesn’t have the capacity to make enforceable promises. So death makes an unenforceable promise enforceable? How? Revocable living trusts are also troubling, but this post is getting long.

    I really don’t see a clear-cut libertarian moral position for why the property does not revert to its natural (un-owned) state when its owner no longer exists. You’re left with utilitarian arguments about accumulation of capital and avoiding reckless disposition at the end of life.

    Of course, I only want a moral justification because it makes me feel good to be able to explain anything with my chosen philosophy. In the real world, wills are for suckers. :-)

  12. #12 |  Thomas Ptacek | 

    The phone card companies sell you 100 “expiring” dollars.

    They know full well that you’ll value the purchase at ~ $100.

    They know full well that you’re likely to consume only 75 of them before they expire.

    Your argument is that the remaining 25 phone-dollars are the rightful property of the phone card company, and that we should be angry about this?

    This doesn’t just happen with phone cards. Among other things, it happens with gift cards of all sorts in states with escheat laws, the concept of which dates back to the middle ages.

  13. #13 |  Dave Krueger | 

    Friggin’ cell phone minutes are sold hoping you won’t use them. Same for gift cards and rebates. If it weren’t for that, they wouldn’t be promoted nearly as much as they are.

    I have a huge balance of minutes on my cell phone because I rarely use it. AT&T starts sending me reminders to extend my subscription several days before it is due to expire, but if I actually do that when they tell me to, they restart the clock immediately rather than starting the new time period when the old one expires. Sleazy assholes.

    You will never meet someone who favors capitalism more than I do, but the fact is that even the “reputable” companies now think nothing of tricking customers into spending more than they need or want to.

  14. #14 |  ClassAction | 

    #11

    I think we’re pretty much in the same boat :-). I myself can’t find my way around any other position other than that the property reverts to an unowned state… even though I find that to be an undesirable (for the most part) outcome. I’m open to being convinced that I’m wrong though!

  15. #15 |  MyOpinion | 

    As for the conversation about wills that this post started talking about, honestly when I’m dead I’m dead what should I care about it. I’m not going to know the difference.

    As for the topic that was originally spoken about. If the government wants to tell the cell phone companies that unused expired minutes belong to them that is great news for the consumer. The last thing any company wants to do is give the government more then they already do all while hurting the companies bottom line significantly. So what is the most logical solution to the problem of expired minutes? Thats easy, the company can simply stop putting expiration dates on minutes. The company might not make as much profit off the minutes as they want to, but they will have solved the problem of the government claiming the minutes.

    The ultimate winner in a lawsuit like this is the consumer, end of story.

  16. #16 |  Jeff | 

    So.. when does the government plan on claiming all the mail-in-rebates that don’t get mailed in and rebated?

Leave a Reply