Retirement & Financial Planning Report

The Senate Special Committee on Aging has started an investigation into reports of increased fraud targeting Social Security beneficiaries who receive their payments through direct deposit.

While one of the arguments in favor of moving to electronic deposit involves the potential for theft of paper checks from the mail, the SSA inspector general has found that fraud involving electronic payments has been rising steadily ever since the Treasury issued a rule in 2010 requiring beneficiaries to generally 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.

Federal retirement payments in general also must now be made via direct deposit.

According to the committee, 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.