DC Sues AT&T for Unused Customer Minutes
In a rather bizarre case, the District of Columbia is suing AT&T for the value of unused money on calling cards owned by someone else.
The attorney general for Washington D.C. has filed a lawsuit against an AT&T Inc (T.N) unit, seeking to recover consumers’ unused balances on prepaid calling cards. The suit claims that AT&T should turn over unused balances on the calling cards of consumers whose last known address was in Washington, D.C. and have not used the calling card for three years.
“AT&T’s prepaid calling cards must be treated as unclaimed property under district law,” the attorney general’s office said in a statement. According to the attorney general’s office, that sum, known in the industry as “breakage,” represents some 5 to 20 percent of the total balances purchased by consumers who use the calling cards.
States and municipalities have often similarly used unclaimed property laws, known as escheat laws, to claim ownership of unused retail gift card balances.
I don’t know the status of these other suits, but agree with Radley Balko that the idea is laughable. He quips, “Next up, D.C. sues Burger King for stray fries that go uneaten after falling to the bottom of the drive-thru bag.” Indeed.
Escheat makes some sense in the case of physical property that is ownerless or unclaimed. For example, property owned by someone who dies without a will or survivors escheats to the state. Ditto, say, tax refunds that are unclaimed after a certain period of time. Something has to happen to that property, after all, and the government — representing the community — is the natural beneficiary of last resort.
In the case of calling cards or gift cards, however, we have a contract between a firm and an individual: A $50 gift card allows the holder to buy $50 of goods or services from the firm within a specified period of time. The failure of the holder to cash in the cards does not — or, at least, should not — create cash value that defaults to the state. Lots of transactions with theoretical value go uncompleted and the beneficiary is the other party.
If, for example, I promise to buy someone a beer the next time they’re in town but they don’t come back to collect the beer, do I owe the mayor a beer? Or, using the example here, the retail value of said beer? Do I have to leave him a tip, too?