Social Security Administration
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
"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
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SSA Press Office 449
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