Financial Service Centers of America (FiSCA) today harshly criticized U.S. Treasury for yesterday's announcement asserting that all recipients of federal government benefits must select a form of electronic means of payment (either direct deposit or debit card) for their benefits by March 1, 2013, or be in violation of Federal law. This position is inconsistent with testimony offered to Congress last fall which clearly stated that beneficiaries would continue to receive their payments via paper check if they had not signed up for an electronic form of payment.
On September 12, 2012, the House Committee on Ways and Means, Subcommittee on Social Security, held a hearing on the rule requiring electronic payment of federal benefits by March, 2013. Richard Gregg, Fiscal Assistant Secretary, U.S. Department of the Treasury, testified at that hearing. At that time, under questioning from Subcommittee Chairman Sam Johnson (R-TX) and ranking member Rep. Xavier Becerra (D-CA), Gregg repeatedly stated that Treasury would continue to issue Social Security benefits via paper check after March 2013 to those individuals who had not signed up to receive their benefits electronically.
In fact, his testimony at the time was: "Social Security understands that we're not going to be at 100 percent (compliance with electronic payment methods) by March 1(st) of 2013 ... In the meantime, those individuals will continue to receive their payments by check."
"Treasury should move immediately to let beneficiaries know that they will still receive their benefits by check after March 1," said Joseph M. Doyle, Chairman of FiSCA. "Millions of Americans are resisting the move to electronic means of payment for a simple reason, it doesn't work for them," explained Doyle. "As evidenced by the dismal failure of the Department's debit card tax refund pilot program, paper checks continue to be the delivery means of choice for a large percentage of low-income recipients of government payments. Treasury clearly stated during the September 2012 hearing that they would continue to issue paper checks after March of this year. Yet they have consistently barraged recipients with dire warnings and deadlines that are disingenuous and misleading."
FiSCA member companies provide basic financial services to millions of Americans on a daily basis. Increasingly, their customers are looking to them for answers related to how to continue receiving their government payments. They don't have or want a bank account because they are too expensive. Likewise, many find debit cards to be confusing, restrictive and costly. They continue to demand payment via paper checks.
Doyle continued, "Treasury and Congress need to reassess this policy, recognize that the 90 percent of recipients who have already signed up for electronic payments is the most that are going to willingly participate. Forcing the remainder of the target population to receive their payments electronically will place undue financial and personal hardships on a segment that can ill afford either."
Doyle concluded: "During that hearing, Rep. Becerra received commitments from both the Treasury and Social Security Departments to look more closely at why 1 in 10 people - often the most vulnerable recipients - do not want to be paid electronically. I think if they do that research before handing down any mandates they will find that one size does not fit all when it comes to government payments."
About FiSCAFiSCA, founded in 1987, is the national trade association for more than 6,500 individual financial service centers across the United States. FiSCA member locations are used by more than 15 million customers each year to conduct wide variety of financial services including check cashing, money orders, money transfers, and electronic bill payment services, automatic teller machine access, government benefit and payroll payments, small dollar short-term loans, electronic tax preparation, prepaid debit cards, deposit acceptance services, public transportation fare and token sales, motor vehicle license plate and title distribution, postage stamp sales and numerous other services. For more information, please visit www.fisca.org.
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