Overdrawn Account - Right of Offset on SSI Benefit

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Question:

We have a customer who receives SSI benefits and is overdrawn a significant amount due to a returned item. Do we have the right to take the SSI direct deposit and apply it to the overdraft or is the customer entitled to the complete benefit?

Answer:

That's been settled, I think. First, it's not an offset when a check is deposited to an account. Secondly, each court case I've read about says the bank can accept the direct deposit and use standard accounting to reduce the preexisting overdraft.

First published on BankersOnline.com 1/19/09