Inspector General Testifies on Direct Deposit of Social Security Benefits

Beyond the Numbers

Thursday, September 20, 2012
Management Challenge: 
Posted by: 
The Office of External Relations

On Wednesday, Sept. 12, 2012, Inspector General O’Carroll testified before the House Ways and Means Committee, Social Security  Subcommittee, at a hearing about direct deposit Social Security benefits. 

As of next March, almost all Social Security beneficiaries will be required to receive payments electronically, either to a bank account, or through other methods like Treasury’s Direct Express® Debit MasterCard program. 

We support the switch to electronic benefit payments over mailing paper checks, because it is a safe and convenient way to receive payments and saves the government money as well, on printing and mailing.  Already, 94 percent of Social Security beneficiaries and 82 percent of SSI recipients use some form of direct deposit.

Unfortunately, a little over a year ago, we began receiving reports from identity theft victims that their monthly Social Security benefits had been sent to a different bank account or a pre-paid debit card, without their knowledge or permission.  Since then, we’ve begun tracking these cases and investigating whenever possible.  The Social Security Subcommittee asked the IG to testify about our investigative efforts related to this fraud, along with our auditors’ efforts to evaluate SSA’s processes and procedures to identify improvements that could be made to reduce the likelihood that this type of fraud can occur.

We have found that most of these incidents are related to widespread schemes that use fraudulent phone calls or emails targeting senior citizens to obtain personal information.  The criminals can then use that information to commit various forms of identity theft—including redirecting direct deposit Social Security benefits.    

While we have made some headway in identifying the perpetrators of these schemes, direct deposit fraud remains a challenge that does not have a single cause or solution. We have recommended that SSA and financial institutions reassess their procedures for changing beneficiaries’ direct deposit information and verifying the identities of the people who request changes. We are also recommending that SSA work with the U.S. Treasury—and the financial institutions that handle Direct Express® enrollments—to enhance identity verification procedures.

However, even with the most stringent safeguards in place, identity theft will remain a persistent and widespread crime; and technological advances have made the potential effects of identity theft even more damaging.  It is up to each Social Security beneficiary to help prevent this type of fraud by closely guarding your personally identifiable information.

Many of these fraud schemes begin with a phone call or email announcing that you have won a lottery, but you must first send money or provide your bank account information so the company can deposit your winnings. The truth is, no legitimate company will make an unsolicited call asking for money upfront in exchange for additional winnings; or for personal information like a Social Security number or bank account number.

If you receive a call or email like this, do not give out any information. Always pay attention to your bank statements and your credit reports—you can receive one free report each year from each credit bureau at

If you suspect that you are a victim of identity theft, you can find helpful information here. You can also view a video about this issue on our YouTube channel, located here. By knowing how to protect ourselves, we make life much more difficult for identity thieves.