Are prepaid AI credits unclaimed property?

It depends on what the balance represents. Unclaimed-property statutes reach intangible property held for another party, and a customer credit balance is a classic example. Where a prepaid balance is redeemable only for the holder's own services and was never funded with money the customer could otherwise have kept, some states exempt it or treat it under a gift-card provision with its own rules. Where the balance is refundable in cash, transferable, or reflects an overpayment rather than a purchase of service, the exemption arguments are much weaker. The distinction that matters is legal substance, not the label used in the billing UI.

Does an expiration clause in our terms of service eliminate the liability?

Frequently not. Many states have anti-limitation provisions that disregard contractual forfeiture for unclaimed-property purposes, on the theory that a holder cannot write itself out of an obligation owed to the owner. Expiration can change the accounting treatment while leaving the escheat obligation intact, which produces the worst version of the problem: revenue recognised years ago and a liability that survives it. Whether a given clause is respected turns on the state and the property type, so a single global expiry policy applied across a national customer base is unlikely to be uniformly effective.

Which state gets the property if we do not have the customer's address?

Priority rules established in federal case law send the property first to the state of the owner's last known address in the holder's records, and second — where that address is unknown or the address state exempts the property — to the holder's state of incorporation. Because a large share of software companies are incorporated in the same state, records with missing or unusable addresses concentrate exposure in the state of incorporation, which is also the jurisdiction most active in this area. Poor address hygiene therefore does not reduce the liability; it relocates it to the most aggressive claimant.

When does the dormancy clock actually start for a self-serve account?

At the last owner-generated activity, not at the last system event. Logins, support conversations, redemptions and account changes initiated by the customer generally count. Automated events initiated by the holder — recurring charges, marketing emails, autoscaling jobs, credit expiry sweeps — generally do not, and relying on them to keep an account 'active' is a common audit finding. For AI products this is subtle, because scheduled agent runs and background API calls can look like usage in the product database while amounting to nothing the owner did.

How far back can an unclaimed-property audit go?

Much further than a tax audit. Limitation periods commonly run from the filing of a report, so a holder that has never filed has often never started the clock, and lookbacks reaching a decade or more are routine. Where records for early years no longer exist, auditors and contract audit firms typically estimate liability from a base period and extrapolate across the unsupported years, which can produce a figure larger than the balances the company actually holds today.

What is a voluntary disclosure agreement and when is it worth doing?

Most states offer a voluntary disclosure programme that trades a self-review and remittance for a shortened lookback and abatement of interest and penalties. It is generally available only before the state or its contract auditor initiates contact, which makes the timing decision a real one: the option closes the day an audit notice arrives. Companies that have booked meaningful breakage and never filed a report are the typical candidates, and the analysis is usually about which states and property types to include rather than whether to participate at all.

Your Expired AI Credits May Belong to a State Treasurer

The Dormancy Clock, Stage by Stage

Balance created

A customer buys credits, overpays an invoice, receives a service-outage make-good or leaves funds in a wallet after downgrading. Only the first of those looks like a sale; the rest arrive as accounting noise and are the balances most often missed entirely.

Owner activity stops

The clock starts at the last act of the owner. Recurring charges you initiate, expiry sweeps you run and lifecycle emails you send are holder activity and do not reset it. Determining this date requires a query nobody has written, because product analytics track engagement, not legal dormancy.

Dormancy period runs

A fixed number of years passes with no owner activity. Periods differ by state and by property type, and credit balances often sit in a shorter class than people assume. This is the only stage that happens on its own, which is why it is the one nobody notices.

Due-diligence notice

Before reporting, the holder generally must attempt to contact the owner at the last known address, above a dollar threshold and within a defined window. Skipping this step is independently penalised and also forfeits the cheapest possible outcome — the customer reactivating and the property never escheating at all.

Report and remit

Unclaimed balances are reported and the funds transferred to the state, which holds them for the owner in perpetuity. The holder is relieved of the obligation only for what was properly reported; anything omitted stays live indefinitely.

Audit and extrapolation

Contract audit firms working on contingency identify holders that have never filed. Where records are gone, liability is estimated from a sampled base period and projected backwards, and the estimate is the starting position in every negotiation that follows.

Not Every Balance Is the Same Balance

The single most useful thing a company can do here is stop treating "credits" as one category. The service-credit arguments that work for a promotional grant collapse entirely for an overpayment, and mixing the two in one ledger field means the weakest position in the pool becomes the position for all of it.

Prepaid token or compute creditsHigh exposure

Sold for cash, denominated in dollars in the billing system and frequently refundable in practice even where the terms say otherwise. Refund history is the fact auditors look for, because a pattern of discretionary refunds undercuts the argument that the balance was never a cash obligation.

Promotional or trial creditsLow exposure

Never funded by the customer, so there is no owner whose property is being held. Keep them in a separate ledger from purchased credits — a single balance field mixing both is the fastest way to lose an otherwise winnable argument about the whole pool.

Customer overpayments and duplicate chargesHigh exposure

Plainly the customer's money, with no service-credit characterisation available. These sit in accounts-receivable credit balances rather than the product database, which is why finance-side aging reports matter more here than anything in the application.

Unused annual seats mid-termLow exposure

Payment for contracted capacity that was made available. The exposure appears only where a contract or a settled practice entitles the customer to a refund or rollover that was never delivered.

Wallet balances after cancellationHigh exposure

The account is closed, the relationship has ended and money remains. Nothing about a cancelled account supports a service-credit theory, and cancellation is a clean, queryable dormancy trigger — which cuts both ways in an audit.

Affiliate, referral and reseller payoutsModerate exposure

Amounts owed to third parties who never claimed them, sitting alongside uncashed vendor and payroll cheques. Payables-side property is routinely omitted from the first draft of a self-review because the credits team never sees it.

Expiration Is an Accounting Decision, Not a Legal One

The instinct on discovering this exposure is to expire balances faster. It is the wrong lever twice over. Several states disregard contractual forfeiture when deciding whether property is reportable, so an aggressive expiry policy can leave the obligation exactly where it was while accelerating the revenue recognition that makes the eventual assessment more painful. And expiry sweeps are holder activity — running one does not restart anyone's dormancy clock.

Worse, expiry interacts badly with the other regime pointed at the same balances. Automatic-renewal and negative-option statutes constrain how prepaid value can lapse in consumer-facing products, and a policy tuned only for escheat can create a disclosure problem in the checkout flow. The two questions are best answered together rather than by two teams in sequence.

Six Signals You Have an Unfiled Liability

01Breakage recognised as revenue on a schedule, with no matching escheat analysis anywhere in the close.

02A single global expiry policy applied to every customer regardless of the address on file.

03Credit balances stored only in the product database, so the general ledger shows a net number and never a per-owner detail.

04No stored country or state for self-serve customers who paid by card without a billing address requirement.

05Support empowered to reinstate expired credits on request — evidence the balance was always redeemable.

06Never having filed an unclaimed-property report in any state, including a negative report.

Address Hygiene Decides Who Assesses You

Self-serve AI products are built to reduce signup friction, which usually means not collecting a billing address. That choice quietly determines the jurisdiction of your unclaimed-property exposure: where the last known address is unknown, the property falls to the state of incorporation under the second-priority rule. A company that incorporated in the usual place and collects no addresses has, without deciding to, routed its entire liability to the jurisdiction with the most developed enforcement apparatus. Capturing and retaining a state and country at checkout is a one-sprint fix with a disproportionate effect on where this eventually lands.

What a Self-Review Actually Looks Like

A credible first pass is narrower than people fear. Pull every credit balance by owner with the last owner-initiated activity date, split purchased balances from granted ones, add accounts-receivable credit balances and uncashed payables, and bucket by the state on file. That single table answers whether the exposure is a rounding error or a board-level number — and it is the same table a contract auditor will ask for, which is a reason to build it while participation in a voluntary programme is still available.

Check What Your Pricing Pages Promise About Credits

"Credits never expire", "roll over automatically" and "refundable anytime" live on pricing pages, help-centre articles and old campaign landing pages — and each one is evidence about what the balance really is.

See every claim your site makes in one pass. Run a free scan and reconcile it against your actual expiry logic.

This article is general information and not legal advice. Unclaimed-property law is state-specific, dormancy periods and exemptions differ substantially by jurisdiction and property type, and the treatment of prepaid service balances remains contested in several states. Consult qualified unclaimed-property counsel before relying on any conclusion here.