Good morning and welcome to our hearing on the direct deposit of Social Security benefits.
Back in 1996, Congress passed the Debt Collection Improvement Act, which required electronic payment of federal benefits, including Social Security benefits.
Not only does the direct deposit of benefits help seniors avoid delayed, lost, or stolen checks, it saves taxpayers money. Taxpayers save 90 cents for every check the Treasury Department doesn't have to send.
In addition to direct deposit, Treasury also supports the delivery of Federal benefits through two other electronic fund transfer methods: the Direct Express® MasterCard® debit card along with other private label reloadable debit cards, if they meet certain Treasury requirements.
Efforts to end paper checks have been underway for over 16 years. The good news is that the percent of all Social Security benefits paid electronically has grown significantly from 56 to over 94 percent today.
In a 2010 rule, Treasury mandated the use of direct deposit for all new Social Security beneficiaries beginning May 1, 2011. Those already receiving benefits are required to sign up for electronic payment by March 1 of next year, a little less than 6 months from now.
At the time of the final rule, Treasury estimated that mandatory electronic benefit payments would save Social Security $1 billion over the next 10 years.
But as usual, we have to worry about ID thieves. As we will hear from the Social Security Inspector General today, increasingly ID thieves have been able to obtain beneficiaries' personal information and use it to redirect benefit payments to their own accounts, often without the beneficiary knowing it happened and sometimes striking the same beneficiary many times over.
It is simply unacceptable that Social Security can't put a stop to this.
While delivering benefits on time and at a lower cost than paper checks makes sense, at the same time millions of seniors and those with disabilities deserve the peace of mind in knowing that their benefits will arrive safely and on time.
We need to determine the flaws in the electronic payment system, protect those who receive their benefits electronically, and make sure that Treasury and Social Security are taking all necessary steps to guard beneficiaries against those trying to steal their benefits.