WASHINGTON (Cox Newspapers) — Glenn Smallwood never opened a bank account and he doesn’t want one now.
Smallwood, of Clearwater, is among millions of seniors who receive Social Security benefits but have yet to get ready for the federal government to convert various payments to an electronic system.
Some plan to open a bank account or accept a debit card as payment by the March 1 deadline. Others, like Smallwood, 64, believe the federal government is stepping on their rights.
“I just don’t think there’s a law that says the government can make a law-abiding citizen do business with a bank,” he said. “I don’t believe I’m the Lone Ranger with this attitude.”
With less than a month to go, about 5 million Americans still receive paper payments from the Social Security Administration, Veterans Affairs, the Railroad Retirement Board, the Office of Personnel Management and the Department of Labor’s Black Lung program.
While the countdown clock on Social Security benefits websites ticks down to the deadline, the Treasury has announced it won’t cut off beneficiaries who have not signed up. They will continue to receive a benefit check, but the Treasury will reach out to them directly to urge them to switch.
The electronic push is expected to save taxpayers $1 billion over the next decade.
Some advocacy groups, including those representing paper industries and those representing seniors, have asked the federal government to delay the conversion or permit beneficiaries to opt out.
AARP, the largest lobbying group representing seniors, is among those who have asked for a delay. The organization is particularly concerned about Americans who do not have a bank account and who are not familiar with debit cards. AARP has also asked the government to limit fees for debit card transactions.
“We encourage Treasury to delay the shift to paperless disbursements until we have further experience with this beneficiary population and needed education can occur to ensure people understand how to use them and how we can reduce financial fraud and abuse,” said Nancy Lemond, executive vice president of AARP.
“For some Americans, monthly costs associated with using the proposed ATM card or other forms of electronic disbursements, including account fees, charges for withdrawals and overdraft fees for some accounts, may be prohibitive.”
The Treasury provided a statement about the card fees:
“The Direct Express card was developed exclusively for federal benefit recipients and can be used with no or low fees. The U.S. Department of the Treasury negotiated low fees for Americans who choose to use the card,” it reads.
Under the new system, beneficiaries who do not have a bank account would have to buy a money order from the post office or pay cash, for example, if their landlord or mortgage-holder doesn’t accept a debit card to pay rent or the mortgage.
Debbie Blake, an administrator at the Mid County Senior Center in Lake Worth, Fla., said her clients do not seem concerned about the change-over.
“Most of ours have direct deposit,” she said.
But John Runyan of the Consumers for Paper Options, which was formed by print industry leaders, said the government has reported an uptick in fraud since millions of Americans have transitioned to an electronic system.
“Cyberfraud is on the rise for seniors who already have their benefits direct deposited or are just making the switch with 50 new victims each day. America isn’t prepared for this, and neither is the U.S. Treasury,” he said.
Scammers targeting seniors are gleaning details they need to steal benefit checks, Runyan said.
“The Treasury is trying to implement a one-size-fits-all mandate, and our most vulnerable citizens are clearly not ready,” he said.
The vast majority of beneficiaries have already signed up for the electronic system. Some of the holdouts, however, will need a waiver, and the federal government needs to make it easier to get one, said Lauren Saunders, managing attorney for the National Consumer Law Center.
“It’s something that will work for most people, but they need a more user-friendly waiver process for the people it doesn’t work for,” she said.
Originally anyone who wanted to apply for a waiver had to have the request notarized. That requirement has been dropped, Saunders said. But her organization is still concerned that when the deadline is enforced, some people, especially the disabled, will lose access to their benefits if they are not given a waiver.
“Is there really a point in forcing somebody who is 85 and can’t see very well and can’t leave the house to use it?” she asked.
Saunders’ office recently received an email from a lawyer in Alaska representing residents in a tiny village.
“They just take those checks and they go to the village store; there’s no banks and there’s no ATMs. They are in a rural area of the country, where the infrastructure is not there in ways we take for granted.”
Laura Green writes for The Palm Beach Post. Email: laura(underscore)green(at)pbpost.com.
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