One of my biggest concerns as a consumer columnist is the vulnerability of senior citizens because scam artists always seem to target them to make a quick buck.
Add to that the vulnerability of any consumer to scam artists, who are always finding new twists to confuse or try to gain financial information.
I often say I could write about this weekly and still there would be people who fall victim to the traps. So the best I can do is educate readers and hope we help each other by watching out for our parents, neighbors and friends.
So in that vein, I want to again remind people: Don’t fall for callers who try to trick you into thinking they are with a certain bank or company or government program and all they need is your Social Security number or your bank account routing number or credit-card number to verify you or process your payment. Why would any company or organization that already has a relationship with you need to verify that information if they already have it?
More on that in a bit.
But because people are in a heightened state of watching out for potential scams, there’s a new move by the Social Security Administration and the U.S. Treasury Department that is not a scam that prompted a call from a reader recently who was concerned about a letter he received explaining the program.
So let’s discuss the move early next year away from paper checks for Social Security payments to electronic direct deposits into bank accounts or issuance of a Direct Express debit card.
Let’s first tackle the scams.
John P. Chames, a financial services professional with Western & Southern Financial Group, who works with a lot of clients in Wayne and Medina counties, phoned me last week to say he was concerned about hearing from three clients in one afternoon about telephone calls they had received.
One client said she was told she had won a contest and the caller needed her financial information. In the other calls, the clients were told the caller needed Social Security number and checking account information to enroll them in a new Medicare or Medicaid program.
“A lot of my account base is seniors,” Chames said. “I am constantly battling with pieces of mail and phone calls they get. A lot of them are pretty scary, and a lot of [the seniors] are naive.”
Robert Fenn, a public affairs specialist in Akron for the Social Security Administration, reiterated that Social Security will not call for such personal information as your Social Security number or bank accounts. If someone contacts you and asks for this information, Fenn said, do not give it. If you are in doubt, you can contact the local Social Security office at the toll-free number: 800-772-1213.
Social Security has become aware of scams targeting beneficiaries, Fenn said in a recent interview. Scammers telephone beneficiaries to tell them they are due additional payments or have lottery winnings. The scammer offers to deposit the money to each beneficiary’s account once the personal and bank account information is provided. Once the beneficiaries provide the information, they become victims of the scam, Fenn said.
He also said another way to protect yourself is to keep your Social Security card and other important documents locked in a safe place. Do not carry them with you. Similarly, Medicare cards, which have your Social Security number on them, should not be carried in your wallet on a daily basis.
If you have to take the Medicare card to the doctor for a visit, carry it only that day. Afterward, put it in a safe place at home. An emergency department cannot deny you service if you aren’t carrying the card.
Social Security checks
If you applied for Social Security benefits on or after May 1, 2011, you had to sign up to receive your Social Security benefits electronically, either through direct deposit into a bank account or through Direct Express, a debit card issued by the Treasury.
For those of you who still get a paper check from Social Security, by March 1, 2013, you must switch to an electronic payment.
In an interview with Walt Henderson, director of the Go Direct Campaign for the U.S. Treasury, I asked what would happen if someone had not signed up for electronic payments by March 1.
“We won’t stop sending their paper check. We’ll communicate with them that they’re out of compliance and need to switch over,” Henderson said.
In other words, they’ll bug you to make the switch, but won’t stop payments.
Henderson said that 93 percent of Social Security recipients already have electronic payments. The majority get it through direct deposit to a checking or savings account.
He said that when he hears people say they’re worried the government is taking away their trip to the bank, he replies, “All we’re doing is electronically depositing it to your account. You can still go to the bank for business.”
One thing to note: Unlike direct deposits with company paychecks, recipients will not get any form of electronic notification that the deposit has been made. Henderson said people are encouraged to check their balances at their financial institutions.
A smaller percentage of customers will want the Direct Express prepaid card.
“This is primarily for unbanked federal benefit recipients,” Henderson said. “We are required to make a low-cost account available for people that don’t have a traditional checking account.”
Henderson said there is no benefit to people who have a bank account to use the Direct Express card.
“If you have a bank account, we want you to get direct deposit to that account. We only want to send you a Direct Express card if you need it and don’t have a bank account,” he said.
The Direct Express card is free to use and functions like any MasterCard debit card. It can be run through the cash register as either a debit or credit transaction with no fee to the customer. Customers can request cash back, also without a fee.
There are some fees for the card. For instance, one ATM withdrawal from an in-network ATM is available per month, but after that, each withdrawal costs 90 cents.
The cards can be loaded only with federal benefits. Customers cannot load their own funds onto the cards and they are not credit cards.
Henderson said the Treasury Department has been sending out letters to explain the program. They instruct people to call or go online if they want to sign up for the card. (800-333-1795 or www.godirect.org.) Direct Express cards can be used for payments from Social Security, SSI, Veterans Affairs, the Railroad Retirement Board, Office of Personnel Management and other nontax payments.
Henderson said people can call the Treasury Department or Social Security to sign up for either direct deposit for banks or the Direct Express card. They can also sign up for direct deposit for their Social Security benefits through their bank.
It would be good to have the bank routing and account information and the most recent benefit check for some information.
Typically it takes 60 days to make the switch to direct deposit or Direct Express.