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.