A government initiative aimed at saving money by eliminating paper checks is hurting some recipients of federal benefits while earning the bank that operates the program millions in fees charged to consumers.
The U.S. Treasury Department has been urging people who collect Social Security and other benefits to switch to direct deposit rather than rely on mailed checks, to save millions of dollars a year in administrative costs.
But beneficiaries without bank accounts — and even some who do have accounts — are being pressured into using prepaid debit cards offered by Comerica Bank, an effort that is shifting costs to elderly people, veterans and other vulnerable consumers. ...
Between October 2011 and the end of August 2012, the Social Security inspector general received more than 18,000 reports of unauthorized changes or suspected attempts to make unauthorized changes to payments. Treasury says it put new procedures in place in January 2012 to reduce fraud. Yet early this year, the Social Security inspector general’s office said it was still receiving more than 50 such reports a day.