diff --git a/lee/privacy_preserving_circuit/src/execution_state.rs b/lee/privacy_preserving_circuit/src/execution_state.rs
index bb6da5dab..deb995cf7 100644
--- a/lee/privacy_preserving_circuit/src/execution_state.rs
+++ b/lee/privacy_preserving_circuit/src/execution_state.rs
@@ -5,7 +5,7 @@ use std::{
 
 use lee_core::{
     Identifier, InputAccountIdentity, NullifierPublicKey, PrivateWitness, WitnessKind,
-    account::{Account, AccountId, AccountWithMetadata},
+    account::{Account, AccountId, AccountWithMetadata, Data},
     encryption::ViewingPublicKey,
     program::{
         AccountPostState, BlockValidityWindow, CallerData, ChainedCall, Claim,
@@ -249,8 +249,8 @@ impl ExecutionState {
             .filter(|(pre_default, post)| pre_default.account != **post)
             .map(|(pre, post)| (pre.account_id, post))
         {
-            assert_ne!(
-                post.program_owner, DEFAULT_PROGRAM_OWNER,
+            assert!(
+                post.program_owner != DEFAULT_PROGRAM_OWNER || post.data == Data::default(),
                 "Account {account_id} was modified but not claimed"
             );
         }
diff --git a/lee/state_machine/core/src/program/mod.rs b/lee/state_machine/core/src/program/mod.rs
index 182d4e9a0..ced27f820 100644
--- a/lee/state_machine/core/src/program/mod.rs
+++ b/lee/state_machine/core/src/program/mod.rs
@@ -658,9 +658,9 @@ pub enum ExecutionValidationError {
     },
 
     #[error(
-        "Post-state for account {account_id} has default program owner but pre-state was not default"
+        "Post-state for account {account_id} has default program owner but pre-state carries data"
     )]
-    NonDefaultAccountWithDefaultOwner { account_id: AccountId },
+    DataBearingAccountWithDefaultOwner { account_id: AccountId },
 
     #[error("Total balance across accounts overflowed 2^256 - 1")]
     BalanceSumOverflow,
@@ -806,12 +806,12 @@ pub fn validate_execution(
             });
         }
 
-        // 7. If a post state has default program owner, the pre state must have been a default
-        //    account
-        if post.account.program_owner == DEFAULT_PROGRAM_OWNER && pre.account != Account::default()
+        // 7. A post state with default program owner must not have carried data in its pre state
+        if post.account.program_owner == DEFAULT_PROGRAM_OWNER
+            && pre.account.data != Data::default()
         {
             return Err(
-                ExecutionValidationError::NonDefaultAccountWithDefaultOwner {
+                ExecutionValidationError::DataBearingAccountWithDefaultOwner {
                     account_id: pre.account_id,
                 },
             );
diff --git a/lee/state_machine/src/state/tests/public_program_rules.rs b/lee/state_machine/src/state/tests/public_program_rules.rs
index a6d38b2ec..6c4cc8462 100644
--- a/lee/state_machine/src/state/tests/public_program_rules.rs
+++ b/lee/state_machine/src/state/tests/public_program_rules.rs
@@ -375,3 +375,112 @@ fn program_should_fail_if_does_not_preserve_total_balance_by_burning() {
         ))) if total_balance_pre_states == 100.into() && total_balance_post_states == 99.into()
     ));
 }
+
+#[test]
+fn default_owner_credited_without_claim_succeeds() {
+    let sender_key = PrivateKey::try_new([1; 32]).unwrap();
+    let sender = AccountId::from(&PublicKey::new_from_private_key(&sender_key));
+    let recipient = AccountId::new([9; 32]);
+    let transfer = crate::test_methods::modified_transfer_program();
+
+    let mut state = V03State::new().with_test_programs();
+    state.force_insert_account(
+        sender,
+        Account {
+            program_owner: transfer.id().into(),
+            balance: 500_000,
+            ..Account::default()
+        },
+    );
+    assert_eq!(state.get_account_by_id(recipient), Account::default());
+
+    let amount: u128 = 1;
+    let message = public_transaction::Message::try_new(
+        transfer.id(),
+        vec![sender, recipient],
+        vec![Nonce(0)],
+        amount,
+    )
+    .unwrap();
+    let witness_set = public_transaction::WitnessSet::for_message(&message, &[&sender_key]);
+    let tx = PublicTransaction::new(message, witness_set);
+
+    state.transition_from_public_transaction(&tx, 1, 0).unwrap();
+
+    let credited = state.get_account_by_id(recipient);
+    assert_eq!(credited.program_owner, Account::default().program_owner);
+    assert_eq!(credited.data, Data::default());
+    assert!(credited.balance > 0);
+}
+
+#[test]
+fn default_owner_balance_is_frozen_even_for_its_signer() {
+    let sender_key = PrivateKey::try_new([1; 32]).unwrap();
+    let sender = AccountId::from(&PublicKey::new_from_private_key(&sender_key));
+    let recipient = AccountId::new([9; 32]);
+    let transfer = crate::test_methods::modified_transfer_program();
+
+    let mut state = V03State::new().with_test_programs();
+    state.force_insert_account(
+        sender,
+        Account {
+            balance: 500_000,
+            ..Account::default()
+        },
+    );
+
+    let amount: u128 = 1;
+    let message = public_transaction::Message::try_new(
+        transfer.id(),
+        vec![sender, recipient],
+        vec![Nonce(0)],
+        amount,
+    )
+    .unwrap();
+    let witness_set = public_transaction::WitnessSet::for_message(&message, &[&sender_key]);
+    let tx = PublicTransaction::new(message, witness_set);
+
+    let result = state.transition_from_public_transaction(&tx, 1, 0);
+
+    assert!(matches!(
+        result,
+        Err(LeeError::InvalidProgramBehavior(InvalidProgramBehaviorError::ExecutionValidationFailed(
+            ExecutionValidationError::UnauthorizedBalanceDecrease { account_id, owner_account_id, executing_program_id }
+        ))) if account_id == sender
+            && owner_account_id == Account::default().program_owner
+            && executing_program_id == transfer.id()
+    ));
+    assert_eq!(state.get_account_by_id(sender).balance, 500_000);
+}
+
+#[test]
+fn default_owner_left_with_data_still_rejected() {
+    let account_id = AccountId::new([1; 32]);
+    let mut state = V03State::new().with_test_programs();
+    state.force_insert_account(
+        account_id,
+        Account {
+            data: vec![0xca, 0xfe].try_into().unwrap(),
+            ..Account::default()
+        },
+    );
+
+    let program_id = crate::test_methods::noop().id();
+    let message =
+        public_transaction::Message::try_new(program_id, vec![account_id], vec![], ()).unwrap();
+    let witness_set = public_transaction::WitnessSet::for_message(&message, &[]);
+    let tx = PublicTransaction::new(message, witness_set);
+
+    let result = state.transition_from_public_transaction(&tx, 1, 0);
+
+    assert!(matches!(
+        result,
+        Err(LeeError::InvalidProgramBehavior(
+            InvalidProgramBehaviorError::ExecutionValidationFailed(
+                ExecutionValidationError::DataBearingAccountWithDefaultOwner {
+                    account_id: err_account_id
+                }
+            )
+        )) if err_account_id == account_id
+    ));
+}
diff --git a/lee/state_machine/src/validated_state_diff/mod.rs b/lee/state_machine/src/validated_state_diff/mod.rs
index dfe1b26ae..4b35385fe 100644
--- a/lee/state_machine/src/validated_state_diff/mod.rs
+++ b/lee/state_machine/src/validated_state_diff/mod.rs
@@ -6,7 +6,7 @@ use std::{
 
 use lee_core::{
     BlockId, Commitment, Nullifier, PrivacyPreservingCircuitOutput, PublicAction, Timestamp,
-    account::{Account, AccountId, AccountWithMetadata},
+    account::{Account, AccountId, AccountWithMetadata, Data},
     program::{
         CallerData, ChainedCall, Claim, DEFAULT_PROGRAM_ID, DEFAULT_PROGRAM_OWNER,
         SystemInstruction, compute_public_authorized_pdas, validate_clear, validate_execution,
@@ -333,7 +333,7 @@ impl ValidatedStateDiff {
             Some((*account_id, post))
         }) {
             ensure!(
-                post.program_owner != DEFAULT_PROGRAM_OWNER,
+                post.program_owner != DEFAULT_PROGRAM_OWNER || post.data == Data::default(),
                 InvalidProgramBehaviorError::DefaultAccountModifiedWithoutClaim { account_id }
             );
         }