Social Security
and Welfare Benefits Going Paperless
Published: January 28, 2011 - New York Times
A rooster is crowing, and an alarm clock chimes. gWake up, wake up, wake up,
itfs the first of the month,h the rap song by Bone Thugs-n-Harmony goes. gTo get
up, get up, get up, so cash your checks and get up.h
Immortalized in rap songs, examined in books on inner city life and discussed
on Facebook,
the federal benefits check has developed into a social and cultural icon. The
checks have generated a gfirst of the monthh economy in some places, as lottery
revenue increases and lines at liquor stores and discount retailers swell. And
in some communities, the checks serve as security to borrow cars, get a loan or
sleep for a few days in someonefs house in hard times, said Sudhir Venkatesh, a
professor of sociology at Columbia
University.
But now, the days for such rituals are numbered.
In May, the government will no longer pay someone eligible for benefits with
a mailed check. Instead, the money will be electronically deposited directly
into a bank account or made accessible by a debit card. And by March 2013, the
10 million people who receive checks, out of 70 million people in all, must
switch over to direct deposit or use a card.
For the government, the policy is in line with a trend toward paperless
banking that will curb theft and save $120 million a year in costs.
But the first of the month wonft be the same anymore.
The change will have social and cultural impact. Some recipients have
resisted it because they cannot open an account, or simply because they feel
more comfortable with a check in hand.
Robert A. Caciopoli, a 72-year-old retired schoolteacher, was one of the
holdouts. Every month, he takes his Social
Security check to the local bank in Bridgeport, Conn. He socializes with the
tellers, some of them former students, and watches them count out his cash.
gI like my money in my hand once, before everybody and his brother gets their
hands on it,h Mr. Caciopoli said.
But Mr. Caciopoli said he was reluctantly switching to direct deposit for his
Social Security checks because he had no choice. gThat is the new wave of things
so they can have their hands on your money,h he said. gIt drives you crazy just
trying to figure out who is getting what and when.h
The paper check has been synonymous with Social Security since the first
recurring payment was mailed to Ida May Fuller in 1940, an event
deemed such a milestone that the Social
Security Administration archived a photograph of her posing with the $22.54
check next to her mailbox in Brattleboro, Vt.
Many older adults lament the new rule as another step, like automated
switchboards, toward impersonal banking. And without a check to hold, they feel
they will have less control over their finances. But government officials
counter that criminals have long preyed on vulnerable individuals, and the
online system provides extra security.
Treasury officials say electronic deposits will eliminate the $93 million in
Treasury checks of all kinds that were fraudulently endorsed and cashed in 2010.
David A. Lebryk, commissioner of the departmentfs Financial Management Service,
said direct deposit payments would be accessible even in natural disasters like
Hurricane
Katrina, when mail delivery is impossible.
While direct deposit of government checks is already widespread in states
like Florida, where there are large populations of retirees, the decision puts
the spotlight on places that do not have banks or where people have little
access to the Internet.
In Elsa, Tex., given the statefs low literacy rate, some older adults rely on
relatives, local stores or senior centers for cashing services.
gSome people did hard labor all their time and they just never learned how to
print their name,h said Armando Garza, a former mayor. gThey just put the X.h
The Federal
Deposit Insurance Corporation said 9.5 percent of Southern households did
not have bank accounts — higher than any other region.
Recipients can choose debit cards instead, but that, too, will take some
adjustment. Under the program, which will be administered for the government by
the financial services company Comerica,
recipients will have access to more than 50,000 A.T.M.fs around the country for
one free withdrawal a month and 90 cents for additional transactions. If one of
the A.T.M.fs is not in their area, they may end up paying fees at other
A.T.M.fs.
Some see the decision as government meddling and say they fear their spending
habits may be traced. But Mr. Lebryk, the Treasury official, said that
information could be obtained only with a court order in a grare exception.h
He said the department expected to keep mailing checks for people in some
areas, including overseas, in remote parts of Alaska and on some Indian
reservations.
Government agencies, sheriffs and banks are preparing for the changes.
Lawrence Grimaldi, a spokesman with the Rhode Island Department of Elderly
Affairs, said the department had directed social workers to help older adults
who might not drive anymore to get state identification cards so they could open
accounts.
Peoplefs United Bank in Bridgeport has been holding gsenior appreciationh
sessions in supermarkets to help older adults, over coffee and cookies,
understand online banking and practice using A.T.M.fs. gI know this is a hard
sell to a lot of seniors,h said Angela DeLeon, a crime prevention specialist who
works with the bank.
In some areas, the new policy may have more of a social impact than an
economic one.
At a New York City housing complex, tenants meet in lobbies to wait for mail
delivery on check day. Some escort older adults to cashing facilities, wary of
the opportunists who may circle on the first of the month. On a remote Indian
reservation in South Dakota, residents of the Rosebud Sioux tribe assemble at
the post office for the arrival of gfirst class,h the slang for mailed federal
checks.
Those casual gatherings could taper off as benefits are instead
electronically deposited into individual accounts.
But other rituals may well survive. There are few places to spend money in
Rosebud, S.D., so the group shopping pilgrimages to Nebraska are likely to carry
on — once a month.
gIt is more or less like a big exodus,h said Perry DeCory, a communications
specialist for the tribe.