I was reading this morning about a U.S. circuit court opinion that a bank cannot touch a directly deposited Social Security check for overdraft purposes. It appears the court feels we should obtain a customer's permission to "attach" their funds in the event of an overdraft situation. I'm not sure, though, exactly when we're suppose to ask--include it in the customer agreement or ask for permission every time we have an overdraft. Or maybe could just require all of our customers to deposit paper checks. Geeezzz!

For those who enjoy light reading, the case is Lopez v. Washington Mutual out of the Ninth Circuit Court of Appeals in San Francisco. Washington Mutual is petitioning for a rehearing with support of the bank trade groups.

There's a good article in the American Banker this morning on this subject.

WAMU has had many groups agree to file friend of the court briefs and is trying to get a new hearing.

The most suprising info in the article was that it implied that the OTS and the Justice Dept were considering weighing in. Sounds like someone in DC woke up and realized what sort of harm this ruling does to seniors and other individuals on government fixed incomes.

Brenda, I took this case to the Compliance Committee just last month to show them how we could run into problems if we overdraw an account that receives direct deposit SS. I think it comes down to a management decision on how much risk they want to assume because in reality you cannot cover the amount you have allowed the customer to overdraw from their direct deposit. Crazy... you try and help someone and get your hand slapped!

BWest

Can't we just ad this to our discloure... we will use ssi direct deposit to cover over draft if needed??????????

For those of you who missed it -- we wrote about this case on BankersOnline on March 15, 2002 (the day after the decision was handed down) -- Offsets Against Social Security Payments and included, of course, the link to the court's decision. There have been a number of threads about it since that time discussing various issues raised by the case.

It is one of the many "hot topics" that you hear about FIRST on BankersOnline.com. We sent out a special Banker Briefing on March 15th to alert subscribers to it. If you only subscribe to the Compliance Briefings (and not the free Banker Briefings), you're missing lots of important information. American Banker is covering the case nearly two months after it was decided -- and nearly two months after we alerted BOL users to it.

It's like the Pfennig case, where the court said that despite what Reg Z says, over the limit charges should be considered part of the finance charge. We wrote about it within hours of the court decision April 11th decision, but other sites are just now coming forward with their analysis. You can find links to those cases and more in Court Watch.

You heard it first on BOL.