Social Security Offset Cases: A Quick Reference Guide
Social Security Offset Cases:
A Quick Reference Guide
Social Security payments and SSI benefits are exempt from attachment and execution under federal law. They're also protected from certain types of action by some state laws. So, what does that mean for financial institutions? Three court cases provide some insight. This quick reference guide helps you keep them straight.
- The federal statute prohibiting attachment and execution against Social Security and SSI funds does not preclude a financial institution from exercising a right of setoff to debit a customer's accounts for overdraft fees incurred by the customer when the deposit account agreement authorizes the bank to collect such fees. (Lopez v. Washington Mutual Bank, FA, 9th Circuit Court of Appeals, 2002
- California state law does not preclude a bank from applying credits for Social Security benefits and other public benefit payments directly deposited to its customers' checking accounts to cover debits for overdrafts and overdraft fees. (Miller v. Bank of America, 1st District Appellate Court, California, 2006, affirmed California Supreme Court, 6/1/2009).
- When a customer is delinquent on a loan, a financial institution cannot offset against an account which contained only Social Security and SSI funds received by the customer. (Tom v. First American Credit Union, 10th Circuit Court of Appeals, 1997).
Links to the cases are under Social Security Offsets on the BOL Court Watch page.
First published on BankersOnline.com 11/21/06. Last updated 6/3/2009
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