Banks Continue to Prey on Social Security Recipients

[formercia]

http://finance.yahoo.com/print/expert/article/moneyhappy/94205

Banks Continue to Prey on Social Security Recipients

by Laura Rowley
Posted on Wednesday, July 16, 2008, 12:00AM
Over a 12-month period, the nation's banks garnished more than $170 million in federal benefits such as Social Security and disability payments on behalf of creditors, even though federal law specifically prohibits the practice, according to a new report by the Inspector General of the Social Security Administration (SSA).

A Spreading Crisis

Last November, I wrote a column about the problem, in which banks freeze the accounts - sometimes repeatedly -- remove the funds, and hit the account holder with non-refundable fees. For one in five seniors, Social Security is their only income, and for two-thirds of retirees, it accounts for most of their income.
--snip--

Meanwhile, banks charge non-refundable fees of $100 to $150 to freeze the account, and often overdraft fees, because the seniors continue to write checks or make debit payments without realizing the money has been frozen. Seventeen banks that responded to the SSA Inspector General's audit reported collecting just over $1 million in fees for legal processing and non-sufficient funds between September 2006 and September 2007.




There's more than one way to loot Social Security....

[checks-n-balances]

1. Predatory practices at their finest

Just one of the tragic outcomes of deregulation...

[Longtooth]

3. Heaven forbid banks try to limit their losses do to people writing hot checks

[Longtooth]

2. I have some experience in the banking area.

First. Paying off a negative balance do to overdraft fees is NOT Garnishment. It is paying back debt. My experience has been that people continue to write checks on accounts knowing that they are out of money. Banks often know the persons situation so the pay the check through and charge the normal NSF fee so that the customer does not have to worry with a bounced check and the associated problems that causes (fees and the merchants, arrest warrants - that sort of thing). Then when the next deposit is made it covers the accounts negative balance first. Such a practice is NOT garnishment.

Now some alternatives are 1) stop the Fed Govt from encouraging direct deposit of SS checks. 2) Do not allow banks to pay through a NSF check and make them return the check to the merchant as NSF.

If there are other alternatives I'd like to hear them.

[formercia]

4. Perhaps they should become better bankers

rather than prey on old people or people on fixed incomes.

[Longtooth]

6. Perhaps people should stop writing checks when there is no money in the bank.

[POAS]

9. This isn't about NO money in the bank

It is about money deposited from a paper Social Security check and then "held" for a period of days by the bank without the knowledge of the depositor. Do you understand the difference?

[Longtooth]

10. No it's about garnishment of federal checks but goes on to describe

how accounts are being "frozen". Do YOU understand that there is a difference?

[POAS]

13. Show me where I used the word

garnishment!

Your answering something I didn't write.

Maybe you just need glasses!

[Longtooth]

15. Read the OP

[POAS]

16. But I'm not the original poster and I never used the

word. Why don't you reply to what I wrote instead of what I didn't write.

Maybe that would be two hard four you. In your case I better add this
:sarcasm:

[DCKit]

7. What does NSF have to do with illegal garnishment of SS payments?

Irresponsibility is one thing, but to have your accounts garnished illegally, then raided at the banks convenience is criminal.

They're fucking with the wrong crowd.

[Longtooth]

11. This is NOT garnishment. Look it up.

[POAS]

8. First thing, learn to use a dictionary

Do and due are NOT the same word.

Second, banks put holds on perfectly good checks deposited in their own clients accounts and often do not inform the client that their is a hold on the money or how long the hold is going to be in effect. It has happened to me many times and I have come to expect it, many do not understand this practice.

The NSF fees are then based on the "hold" and NOT on a true lack of funds.The bank in effect held another persons money as if it were their own and then punished the victim with fees and penalties.

The client is then probably unable to transfer to another bank because their name is now in a database which identifies then as a bad risk.

As for direct deposit, those funds are NOT usually subject to a "hold". It is the deposited paper checks that get held.

[Longtooth]

12. Perhaps you should use the dictionary yourself. Start in the "G"s and

work down to garnishment. You need to understand what "garnishment" is.

[boomerbust]

5. This happened to me

The state froze my checking account SSD for back taxes owed.

[grasswire]

14. remedy

Get a paper check in the mail from SSA. Cash it. Keep the money at home.

[formercia]

17. But, but...

Didn't you know that banks are a much more secure place to keep your money?

Not, methinks.