The Social Security Administration (SSA) has opened “multiple investigations across the country” into theft of beneficiary payments involving direct deposit bank accounts, SSA Inspector General Patrick P. O’Carroll Jr. told the House Ways and Means Committee. The Recovery Board recently provided data analysis to SSA Inspector General (IG) investigators, who as of December 17 have received more than 28,000 reports of questionable changes to beneficiaries’ direct deposit accounts.
“These reports have involved either an unauthorized change to direct deposit information, or a suspected attempt to make such a change,” O’Carroll testified. In November 2012, his office was receiving about 59 reports a day.
The scam works like this: Criminals obtain personal identity information of mostly older SSA beneficiaries usually through some type of deception, such as government-employee impersonation, telemarketing ruses or bogus announcements of sweepstakes winnings. The scammers then use the beneficiary’s personal information to change their direct deposit record either by contacting SSA directly or more frequently through financial institutions, to include pre-paid debit card entities.
In one case, an 86-year-old man received a letter saying he had won $3.5 million and that he should call the included phone number to provide necessary information for receiving the money. Soon after calling, “the man did not receive his scheduled Social Security payment, so he contacted SSA, only to learn that his benefits were diverted to a different account,” O’Carroll said. “He was issued a replacement payment, but the man reported that the ordeal caused two months of hardship, as he was forced to obtain a bank loan to pay his rent and for other living expenses.”
SSA has since revised guidelines for handling requested changes to a beneficiary’s bank information, but most requests come by phone. As O’Carroll pointed out, “Accurately verifying an individual’s identity over the phone presents more challenges to SSA staff than a face-to-face verification in a field office; thus, the risk of fraudulent record changes increases when staff processes requests over the phone.”
SSA IG officials have made recommendations for reducing such risk, including delaying direct deposit changes for a certain period of time and generating automatic emails to inform beneficiaries that changes have been made.
O’Carroll also urged beneficiaries to be wary or suspicious of offers or “winnings.” And beneficiaries should notify their local SSA office as soon as they notice their monthly payment is late.
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