Jan 30, 2013

The Problem With Direct Deposits Of Social Security Benefits

     From a summary of a report by Social Security's Office of Inspector General (OIG):
In October 2011, we began tracking allegations that indicated individuals other than the beneficiaries or their representatives had redirected benefit payments away from the beneficiaries’ bank accounts to accounts the individuals controlled. As of August 27, 2012, we had received over 18,000 reports concerning an unauthorized change or a suspected attempt to make an unauthorized change to an SSA beneficiary’s record. ...
Controls over direct deposit account changes were not fully effective and did not prevent field office staff from processing direct deposit account changes requested by someone other than the beneficiary or his/her authorized representative.
     OIG has only posted a summary of the report, perhaps out of concern that criminals might use the full report to come up with new methods of defeating Social Security's security processes.
     I fear this problem is only going to get worse with time. While it has been possible to have paper checks diverted, criminals always had the problem of negotiating the paper check after they stole it. With direct deposit, the negotiation problem is eliminated. Open a bank account online, divert money to it for one or two months, use a debit card to take the money or, if you're more sophisticated, divert the money overseas. Disappear. Repeat. There's little risk of being caught. No one's going to investigate each case that closely since only a few hundred dollars are involved.


Anonymous said...

SSA did recently implement a direct deposit fraud initiative to counter act that problem. Now claimants can request a block on electronic changes/enrollments to their benefits. If they do this, the only way to initiate/change/remove a direct deposit account s in person at a local office.

That should help.

Anonymous said...

re: 1:14pm

You have to be a SSA management person who has no effin clue as to how the real world works.

SSA's initiative doesn't do crap for preventing the direct deposit fraud problem. It only helps the majority of people once they have become victims of this fraud. Because SSA doesn't advertise the possibility of direct deposit fraud and tell people specifically that they can block direct deposit changes, people generally have no clue that they can do this.

The entire crux of the matter is that banks do auto-enrollment changes of direct deposit via the Treasury Department which bypass SSA's standard identity checks. Most of the problem banks are enrolling these criminals in debit card accounts with as little ID as asking for Name, SSN, and date of birth over the Internet. Completely and utterly ridiculous.

The agency could solve the problem by totally blocking auto enrollments (other than Direct Express) via Treasury, or even by making the banks liable for the overpayments which occur because of their incompetence and culpability in enabling the fraud.

And, since OIG doesn't pursue any of these cases, it is really just free money to these criminals.

And we all wonder why this country is so broke.

Anonymous said...

Wow. Didn't I just say it should help! I didn't say it would eliminate the problem. The fraud block, once it's activated does prevent ANY auto-enrollment, including Direct Express. Claimants don't have to wait to be victimized to put the block on their record, although I suspect most will.

As for being management, no I'm not. Have you ever seen anything SSA implements reflect real world scenarios? The policies are concocted by people who have no idea what's going on in the field. I don't disagree with requiring direct deposit, but I have said for the past few years that electronic enrollment is just a bad idea period. As is the Direct Express program in its current state.

iquanyin moon said...

directexpress is shady itself. google it and weep.

iquanyin moon said...

directexpress is shady itself. google it and weep.

Howard said...

dang,now I'm spooked.just signed up because DE came with my ssi check ...oh boy what shod I do?