Minority Press

Panel to Examine Targeting of Social Security Benefits by ID Thieves

WASHINGTON, DC - When Alexandra Lane discovered last March there wasn't enough money in her checking account to pay her bills she knew something was wrong. 

The 73 year-old Winter Haven, Florida resident had become accustomed to having her Social Security benefits electronically deposited into her bank account on the third Wednesday of every month.  But, this time her benefits had not arrived.  Instead, Lane soon learned she had fallen victim to identity thieves who had rerouted three-months' worth of her benefits onto their own pre-paid debit card.

What followed was a 50-day ordeal to recover her hard-earned money.  Lane was fortunate because she had a small amount of savings that helped keep her and her husband afloat.  But for more than 5.2 million seniors nationwide, and nearly a third in Florida, Social Security benefits are their only source of income.  Without this money, they would be unable to pay for basic necessities such as rent, food or medicine.  

According to the Social Security Administration (SSA) inspector general, Social Security fraud involving electronic payments has been rising steadily ever since the U.S. Treasury issued a rule in 2010 requiring beneficiaries to switch from paper checks to electronic benefits.  Between October 2011 and June 1, 2013, the SSA IG's office reported receiving more than 37,000 reports involving questionable or attempted direct deposit changes.      

Typically, the fraudulent scheme works when identity thieves obtain a beneficiary's personal information then contacts Social Security or bank officials to request payments be rerouted to their own bank or debit card account.  More recently, the inspector general has found that identity thieves are now taking advantage of a new option to set up an online Social Security account and change where the beneficiary's Social Security benefits are deposited.

On Wednesday, the U.S. Senate Special Committee on Aging will examine what steps SSA is taking to help make victims whole and what both SSA and Treasury are doing to prevent the fraudulent redirecting of benefits.  The hearing will also explore the role of Direct Express cards, the government preferred debit card designed for beneficiaries without bank accounts, and the rationale behind Treasury's decision to renegotiate the contract with the bank offering the card.   A recent internal committee investigation found that Treasury amended the contract twice outside of the competitive bidding process to provide additional compensation to the bank, despite the fact that the bank contended it could already provide the same services for significantly less money. 

In addition to Lane, witnesses include: the SSA inspector general; the SSA assistant deputy commissioner of operations; Treasury's  fiscal assistant secretary; and a victim advocate.   The hearing is the third in a series of investigations the panel has undertaken this year on scams affecting the elderly. 

HEARING: Social Security Payments Go Paperless:  Protecting Seniors from Fraud and Confusion
2:00 p.m., EDT, Wednesday, June 19, 2013
Dirksen Senate Office Building, Room 366
Alexandra Lane, Victim of Social Security fraud

Rebecca Vallas, Staff Attorney and Policy Advocate, Community Legal Services of Philadelphia

Theresa L. Gruber, Assistant Deputy Commissioner of Operations, Social Security Administration

Richard Gregg, Fiscal Assistant Secretary, U.S. Department of Treasury

The Honorable Patrick P. O'Carroll, Jr., Inspector General, Social Security Administration