No More Paper Checks
As CNN Money recently explained, federal officials moved to “retire” paper checks in order to cut spending and improve efficiency. The goal is to shift everything to prepaid “Direct Express” debit cards. The process began well over a year and a half ago, and recently a ruling was made which set March 1, 2013 as the deadline for the phase out. Functionally, this means that “all new recipients of payments from federal benefits programs, including Social Security, Supplemental Security Income Disability, Veterans Affairs and government pension plans [were required] to sign up for electronic payments.” Our social security attorney advises all local residents affected to be aware of the change and ensure everything is in order so that there is no interruption in service. The New System According to the report, the “alternative' system–Direct Express debit cards–are to be used for those without bank account. Instead of direct deposits to a bank account, the payments will be made to the card. This card then works anywhere that MasterCard is accepted. Also, like a debit card, it my be used to withdraw cash at ATM machines. The shift to the new system is also complete as sources report that approximately 93 percent of payments are currently being made electronically. However, about five million checks are still mailed each month, costing the federal government an additional $4.6 million in monthly costs, with each check costing 92 cents more than a direct deposit transfer. If the federal government did not begin to push for a switch to electronic transfers, it would cost taxpayers another $1 billion over the next ten years. As a result, the remaining check recipients are being urged to beat the March 1, 2013 deadline. The government is partnering with more than 1,800 local, regional and national banks, credit unions, social service agencies and community groups to ensure that check recipients receive word of the impending deadline, through mailings, public service announcements and the internet. Any current check recipients that fail to change to electronic transfers by the deadline will still continue to receive paper checks. However, they will be the target of more aggressive communication efforts, such as additional mailings. Preventing Confusion The Treasury Department has moved to curb any misunderstandings about how direct deposit works. The Department fears that some are not converting to electronic payments due to these misunderstandings. Recipients are not required to purchase or use a computer in order to utilize electronic payments. Similarly, recipients will not need to use the internet to receive or spend the deposits. Electronic payments are safer than paper checks. In 2011, more than 440,000 Social Security checks were reported lost or stolen, while $70 million worth of checks were fraudulently endorsed. However, electronic payments also come with their own fraud issues. In September 2012, the inspector general of the Social Security Administration told Congress that identity thieves fraudulently redirected seniors' benefit payments to different bank accounts using stolen Social Security numbers. To prevent fraud, officials recommend that seniors never provide personal information to unsolicited callers and always check with a local Social Security Administration Office if contacted by someone claiming to be an administration employee. If you have any questions related to social security in our area, consider contacting the social security disability lawyer at our firm for tailored help.