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Tuesday, October 2, 2012

Direct Express cardholders scammed

As the U.S. Department of the Treasury pushes to get all Social Security recipients on some form of digital disbursement method by March 2013, a new scam involving Social Security payments and prepaid cards was disclosed at a congressional hearing. Fraudsters are reportedly obtaining the account details of Social Security recipients, including people who opt to have funds loaded on Direct Express prepaid cards, and then direct depositing payments to other bank accounts or onto other prepaid cards.

On Sept. 12, 2012, Social Security Administration Inspector General Patrick P. O'Carroll Jr. testified before the House Ways and Means Committee, Social Security Subcommittee, that SSA began receiving complaints from victims of the scam a little over a year ago. The victims told the SSA that their monthly benefits had been rerouted without their knowledge or permission, O'Carroll said.

The SSA's subsequent investigation found that "widespread schemes" involved fraudsters calling or emailing targeted senior citizens to obtain personal information, which they then used to change account details and redirect funds, according to O'Carroll.

"While we have made some headway in identifying the perpetrators of these schemes, direct deposit fraud remains a challenge that does not have a single cause or solution," he said. "We have recommended that SSA and financial institutions reassess their procedures for changing beneficiaries' direct deposit information and verifying the identities of the people who request changes."

O'Carroll advised the SSA and the U.S. Treasury work with financial institutions that handle enrollment of people into the Treasury's Direct Express prepaid card program to enhance identity verification procedures. end of article

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