Delaware v. Arkansas is an original jurisdiction action pending before the United States Supreme Court. In that case, numerous states ask the question – what law determines which state can escheat unclaimed “official checks” issued by MoneyGram;1 the federal common law set forth in Texas v. New Jersey,2 or a federal statute3 governing “money order[s], traveler’s check[s], or similar written instrument[s].” Under the federal common law set forth in Texas, official checks issued by MoneyGram, which lack addresses, would escheat to Delaware, MoneyGram’s state of incorporation. In contrast, under the federal statute, those official checks would escheat to the state in which the checks were purchased from MoneyGram.4 At its heart, the case hinges on whether MoneyGram official checks are “similar written instruments” within the meaning of that phrase in the statute enacted by Congress.
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Home Perspectives Financial institutions beware: Delaware seeks third party discovery in money order dispute
In ongoing litigation in the United States Supreme Court, Delaware has asked other states to produce evidence of financial institutions’ escheat practices as well as their identities. If the Court agrees to allow Delaware’s request, there could be far reaching implications for financial institutions. For example, Delaware could potentially issue direct requests to non-party holders or use this information to initiate audits against certain financial institutions.