Friday, July 30, 2010

Direct deposit of Social Security checks leaves seniors vulnerable

NCLC has released a new report: "Runaway Bandwagon: How the Government's Push for Direct Deposit of Social Security Exposes Seniors to Predatory Bank Loans," available at http://www.nclc.org/images/pdf/pr-reports/runaway-bandwagon.pdf.

It was also featured in a Wall Street Journal article, "Treasury Draws Fire on Paperless Social Security Checks," available here.

The report looks at how Treasury's push to require all recipients of Social Security and other benefits to receive payments by direct deposit by 2013 will expose many seniors to predatory payday loans made by banks.

The focus is on account advance products (aka "bank payday loans") – which can have APRs as high as 1,800% – that some banks offer to customers with checking accounts or prepaid debit cards that get regular direct deposits of benefits or other sources of income. Banks help themselves to funds directly from customers’ accounts to repay loan principal and fees, so that these loans closely resemble both fee-based overdraft programs and typical payday loans.

The report calls on Treasury to take responsibility for ensuring that all accounts into which benefits are direct deposited are safe so that the direct deposit push doesn't result in seniors and other beneficiaries being bled of vital subsistence resources.

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1 comment:

  1. Hey!! I am completely agree with this blog that when you applying for the social security benefits then direct deposit of social security checks leaves seniors vulnerable. And I think this is under the rules of government which is exactly correct.

    ReplyDelete