The report looks at how Treasury's push to require all recipients of Social Security and other benefits to receive payments by direct deposit by 2013 will expose many seniors to predatory payday loans made by banks. The focus is on account advance products (aka "bank payday loans") – which can have APRs as high as 1,800% – that some banks offer to customers with checking accounts or prepaid debit cards that get regular direct deposits of benefits or other sources of income. Banks help themselves to funds directly from customers’ accounts to repay loan principal and fees, so that these loans closely resemble both fee-based overdraft programs and typical payday loans. The report calls on Treasury to take responsibility for ensuring that all accounts into which benefits are direct deposited are safe so that the direct deposit push doesn't result in seniors and other beneficiaries being bled of vital subsistence resources.

Jessica Hiemenz, National Consumer Law Center