As Government Prepares Paperless Social Security Checks, Consumer Groups Say: Not So Fast

The problem with this is, there have been instances of storefront check cashing agencies and payday lenders taking loan payments and fees out of a rec

The problem with this is, there have been instances of storefront check cashing agencies and payday lenders taking loan payments and fees out of a recipient's Social Security checks -- even though it's illegal. Good idea to get some solid oversight in place to protect the poorest and most vulnerable from illegal practices:

Several consumer groups are urging the Treasury Department to revise plans to eliminate paper Social Security checks, saying the changes are needed to prevent potential abuses by creditors.

In April, the Treasury said it would stop issuing paper checks in 2013 and make all payments electronically. More than two million people who receive Social Security checks in the mail would have their benefits deposited directly into bank accounts or onto prepaid debit cards.

The proposal to eliminate paper checks is intended to save taxpayers money and make benefits more secure. Currently, 80% of Social Security recipients choose to have their benefits deposited directly in banks.

Last week, consumer groups including the Consumer Federation of America and Consumers Union asked the Treasury to provide more safeguards to prevent potential abuses from "payday lenders" and banks getting access to Social Security and disability benefits before beneficiaries receive them.

The requests come after congressional hearings about high-interest lenders, which provide small, short-term loans that are secured by coming pay or benefits checks, having access to Social Security funds of customers who owe them money.

"We're working to implement strong consumer protections against abusive or deceptive practices," said Dick Gregg, a fiscal assistant secretary at the Treasury.

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