Fort Myers, Florida (News-Press) -- Once upon a time thieves stole Social Security checks from mailboxes.
That was so 20th century. Now thieves steal the checks online directly
receiving the payment and eliminating the middleman.
thieves obtain the personal information of Social Security
beneficiaries and then reroute the victims' direct deposit. Instead of
monthly Social Security checks going into a beneficiary's bank account,
the electronic payments go on to prepaid debit cards thieves use to get
cash or buy merchandise.
new and disturbing trend targets the 62 million people who each month
receive payments from the Social Security Administration including
140,000 in the Fort Myers area and some 93,000 in the Naples area. Not
only does this scam have the potential to disrupt and even devastate the
lives of seniors and disabled workers who depend on the timely arrival
of Social Security payments, it is also costing the U.S. taxpayers
millions as scammers make off with money Social Security must reimburse
there are nearly 40,000 reports of this type of scam. In Florida, 7,721
people have been victims of direct deposit fraud including 426 victims
in Charlotte, Collier and Lee counties.
Trudie Prevatt of Fort Myers was one.
received a letter from the Social Security Administration thanking her
for setting up an online account with Social Security.
The problem: "I never set up a Social Security account online," Prevatt said.
called Social Security and was asked to verify her address. It didn't
match the one her online account listed in Miami, nor did her bank
account match where her check was now going. Prevatt went to the local
Social Security office the next morning.
told me it was too late to stop the check from going to Miami," Prevatt
said, but she would get her payment as usual but a few days late.
What angers her, Prevatt said, is that a "slime ball" in Miami got away with the scam.
"This cost the taxpayers the first check and the second check," she said. "The taxpayers have to pay for this."
She's right. A potential loss of $17.4 million due to unauthorized
direct deposit payments is the current estimate for a nine-month period
under review by auditors for the Inspector General's office. And that
figure covers a period in 2011 through 2012, prior to the scam picking
up steam with the expansion of online services to beneficiaries.
O'Carroll, inspector general of the Social Security Administration,
testified before a congressional committee that as of June 1, his office
had received more than 37,000 reports of "questionable changes to a
beneficiary's record," and continues to receive about 50 reports each
day of unauthorized changes or attempts, most involving redirecting
benefits to prepaid debit cards.
January, the Social Security Administration expanded its online portal,
"My Social Security" to allow people to change their address and direct
deposit information, O'Carroll said. "Since then, the SSA reports that
more than 22,000 potentially fraudulent My Social Security accounts have
been opened," he stated.
Benefit hijacking couldn't exist - or would definitely be made much more difficult - if it weren't for prepaid debit cards.
private prepaid debit cards to accept federal benefits just doesn't
make sense," U.S. Sen. Bill Nelson, D-Orlando, said in an email response
to questions from The News-Press. "Especially when the government has a
preferred debit card of its own that folks can use and it generally
offers lower fees and greater consumer protections than private prepaid
government has a contract with Direct Express debit card to receive
Social Security payments. But that doesn't mean a consumer can't choose a
different brand of a prepaid card.
cards can have higher fees and often don't protect consumers when it
comes to loss or theft, said Rebecca Vallas, staff attorney/policy
advocate with Community Legal Services in Philadelphia. When funds are
stolen from a bank debit card, for example, the law requires the
consumer be made whole, a private label card doesn't have to.
Jennifer Tramontana, a spokeswoman for the Network Branded Prepaid
Card Association, a trade association for the prepaid card industry,
said private label cards give consumers more options such as allowing
all of their retirement funds to be deposited into the card, not just
Social Security payments.
But a crowded
field of debit cards obscures the actions of identity thieves, making it
difficult for law enforcement to uncover and break up theft rings.
have however, been several high-profile arrests and convictions. Many
of the cases linked to Jamaican telephone marketing scams used to trick
vulnerable seniors into disclosing their addresses, Social Security
numbers and other personal information identity thieves may use.
response to the rise in benefit hijacking, Social Security has made it
more difficult for an imposter to access and open an online account by
requiring more identifying information. And the information received is
verified with a credit reporting agency.
Patterson, regional communications director for Social Security, said
in an email thieves set up "My Social Security" accounts using personal
information of a beneficiary and through the automatic enrollment
process at financial institutions. That's one good reason, she said, to
set up a "My Social Security" account.
"If a person already has an account, a fraudulent attempt will not be successful," Patterson said.
People can also block direct deposit changes through the automatic enrollment process by contacting Social Security.
Gordon Ramsay contends blocking is what most people should do.
Gordon's wife, Audrey, received the letter from Social Security
thanking her for setting up an online account, she thought it was a
everything about the letter looked authentic, Gordon Ramsey said. So the
couple, who lives in downtown Fort Myers, visited the Social Security
office on Colonial Boulevard, where Ramsey said he was told eight or
nine people a day come in with the same complaint.
The agent who helped them, Gordon Ramsay said, "appealed to us to notify all of our friends and acquaintances," about the scam.
The Ramsays blocked their Social Security accounts so that no one - not even the Ramsays - can access their account online.
Ramsay also sent a letter to fellow members of the Royal Palm Yacht
Club detailing the couple's ordeal and encouraging people to call Social
Security or go to the office and block their accounts.
Ramsay's quick response allowed her payment to arrive on time. But if
the check had been late or missed, the Ramsays would have been
inconvenienced but not financially devastated, because they don't depend
on Social Security as their only source of income.
5.2 million seniors - a third of whom live in Florida - do rely solely
on Social Security income, according to what Sen. Nelson said in his
opening statement at a June 19, hearing before the Senate's Special
Committee on Aging. Nelson also pointed out in the hearing that benefits
being redirected to prepaid cards was never an issue prior to what he
described as the Department of the Treasury's, "aggressive campaign to
get people to switch to electronic payments."
L. Gregg, fiscal assistant secretary at the Treasury Department, in
that same hearing, lauded direct deposit and electronic transfer.
costs $1.25 to send a paper check and 9 cents to make an electronic
deposit. The push to electronic deposits resulted in an $885 million
cost savings, Gregg said.
saving money for some taxpayers can't come at the expense of other
taxpayers - those who are victims because of electronic thievery.
Vallas said she has had clients who've been evicted, missed mortgage
payments, paid hundreds in late fee and overdraft charges and have even
become homeless after their benefits were hijacked.
has an obligation to ensure that the available payment methods are
secure," Vallas said. People collecting Social Security, "(S) hould be
able to trust the methods Treasury has made available for them to get
even given the thousands of checks stolen electronically, the number
pales in comparison to losses when checks were mailed the old fashioned
way. According to Inspector General O'Carroll, in the 2012 fiscal year
more than 521,000 Social Security checks were reported lost or stolen.