Brought to you by WBIW News and Network Indiana
Last updated on Tuesday, April 17, 2012
(INDIANAPOLIS) - For hundreds of thousands of Hoosiers receiving government benefits, the check will not be in the mail.
Starting next year, paper checks will be phased out for all benefit programs, requiring people to get payments electronically.
In August 2011, an WTHR TV 13 investigation showed how some of these government checks were ending up in the hands of prison inmates behind bars.
Now state and federal government are cracking down on fraud in and outside of prison walls.
78-year-old Earl Lott understands the risks of checks in the mail.
"You know a lot of people stole a lot of the checks," he said.
He's helping his 90-year-old friend get every penny she has coming and counting on the government to deliver.
For years, Lott, his friend and millions of others have been waiting on the mail for tax refunds, Social Security payments and veterans and disability checks.
But come next year, all except tax refunds must be directly deposited into a bank account or put on a debit card.
"I think that's really good," said Lott. "This way they couldn't steal anything because you have a PIN number."
Fraud isn't just a concern for seniors.
At the Indiana Department of Correction, government checks are a sore topic.
"Criminals find ways to cheat the system," said Doug Garrison, a spokesman for the agency.
Last July, Investigators discovered thieves, drug dealers, child molesters, even murderers getting Social Security, disability, and even tax checks delivered directly to Indiana prisons.
Since 1974 those payments have been outlawed for prison inmates, but 13 Investigates found them still slipping in prisons across the state.
13 Investigates outlined the problem at the DOC last July showing copies of checks sent to the prison, month after month to the same inmate.
"If that's not the bureaucracy of government, I mean, it's crazy," said Garrison reacting to the findings.
The new electronic system could help stop it.
"We're not going to allow those debit cards into our prisons," insisted Garrison.
Those debit cards should be easier to detect during inspections. And for the first time, Indiana and other Department of Correction agencies across the country are sharing information with the IRS to stop inmate tax fraud.
Outside prison walls, there's concern about senior unfamiliar with electronic payments losing track of debit cards and even their spending.
Thomas Sellers says direct deposit is the best option.
"I think that's okay. Only thing I don't know about is keeping up with your balance," added Sellars.
"If you educate the people on using it, I think they have a real good plan on this," said Lott.
There are no fees for direct deposit accounts. Debit card users will be able to make purchases anywhere most credit cards are accepted with no fees.
One withdrawal is allowed each month, but a fee of 90 cents will be added with each additional cash withdrawal during one payment cycle.
The Treasury Department says 90 percent of those who receive federal benefits already get their payments electronically.
By March of next year, the remaining 10 percent will have to make the switch unless they receive a rare federal waiver.
Get more information on the new system here or call toll-free: 1-800-333-1795.
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