SOCIAL SECURITY

News Release

Social Security Administration Takes Action
to Preserve Direct Deposit

Concerned that a recent United States Court of Appeals decision could threaten access to critical banking services such as direct deposit for more than 50 million elderly and disabled Americans, the Social Security Administration (SSA) is asking the Ninth Circuit to reconsider this potentially damaging decision.

Through the United States Department of Justice, SSA has filed a friend of the court brief in support of a rehearing of the case of Lopez v. Washington Mutual Bank.

"SSA wants to make sure our 50 million beneficiaries will continue to have access to valuable services like direct deposit," said Jo Anne Barnhart, Commissioner of Social Security. "Direct Deposit is a safe, convenient and worry-free way for people to receive Social Security and Supplemental Security Income (SSI) payments. But if the Court's decision stands, banks may be unwilling to accept individuals who receive these payments through direct deposits."

The plaintiff, Lopez, who had his Social Security and SSI benefits electronically deposited into his account, sued Washington Mutual to prevent the bank from using these benefits to clear overdraft balances and to pay overdraft fees. A district court granted a summary judgement for the bank, which Lopez appealed. A three-judge panel for the Ninth Circuit Court held that the bank was prevented from recovering overdrafts from benefits directly deposited in the account. SSA's friend of the court brief asks the full Circuit Court to reconsider that decision.

"We have met with advocates for both sides of this issue," said James Lockhart, Deputy Commissioner of Social Security. "SSA believes this case is critical to preserving direct deposit. Direct deposit has been available since 1976, and today almost 80 percent of our beneficiaries have chosen to receive their benefits this way. We believe that requiring banks to treat our beneficiaries differently may force these institutions to reduce the range of services they are willing to provide."

In the brief, SSA makes it clear that its primary interest is ensuring that direct deposit in banks remains an option for Social Security and SSI beneficiaries.

May is National Direct Deposit and Direct Payment Month. To learn more about SSA’s latest efforts to promote direct deposit, visit www.ssa.gov/pressoffice/bravest.htm

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