My bank violated Section 207 of the Social Security Act. What are my rights?
Full Question:
Answer:
The section you refer to provides as follows:
ASSIGNMENT
Sec. 207. [42 U.S.C. 407]
(a) The right of any person to any future payment under this title shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this title shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law.
(b) No other provision of law, enacted before, on, or after the date of the enactment of this section, may be construed to limit, supersede, or otherwise modify the provisions of this section except to the extent that it does so by express reference to this section.
(c) Nothing in this section shall be construed to prohibit withholding taxes from any benefit under this title, if such withholding is done pursuant to a request made in accordance with section 3402(p)(1) of the Internal Revenue Code of 1986 by the person entitled to such benefit or such person’s representative payee.
Under the section above, 407, Social Security Benefits are highly protected from almost any third party claim or execution. Any exception has generally been enacted by Congress such as to allow Social Security Benefits to be used to enforce Child Support orders. But no person has to agree to allow Social Security Benefits to be used or taken by the third party.
The opinion of Lorez vs. Washington Mutual Bank, 284 F.3d 990 (2002) addresses a similar issue. In this case the Court ruled that a bank could not use direct deposit Social Security Benefits to offset overdraft charges.
In so ruling the Court opinion provided:
The Supreme Court has recognized that the Social Security Act is "unusually protective" of claimants. Bowen v. City of New York, 476 U.S. 467, 480, 106 S.Ct. 2022, 90 L.Ed.2d 462 (1986). The Court has also noted that there are no implied exceptions to the protections of Section 407(a), and that "Section 407(a) unambiguously rules out any attempt to attach Social Security benefits." Bennett v. Arkansas, 485 U.S. 395, 397, 108 S.Ct. 1204, 99 L.Ed.2d 455 (1988). When Congress has created exceptions, it has done so expressly, as with enforcement of child support orders. 42 U.S.C. § 659(a).
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In Crawford v. Gould, 56 F.3d 1162 (9th Cir.1995), we addressed California's practice of taking Social Security benefits from institutionalized patients' hospital accounts to pay for the cost of their care and treatment, whether or not the patients had signed a form authorizing such deductions. California argued that its actions were not prohibited by Section 407(a) because they had not resorted to any type of "other legal process" similar to those expressly listed in the statute. Id. at 1166. We rejected this argument, noting that Section 407(a) was designed "to protect social security beneficiaries and their dependents from the claims of creditors" (quoting Fetterusso v. New York, 898 F.2d 322, 327 (2d Cir.1990)), and that the "cramped reading of § 407 California urges would enable the state to obtain Social Security benefits through procedures that afford less protection than judicial process affords." Id. We therefore determined that reading "other legal process" to include the practice of withdrawing benefits from the accounts without consent was consistent with the purposes underlying Section 407. Id. at 1167-68.
Washington Mutual argued that the bank account agreement and other facts showed that the Plaintiffs consented to the use of the SS benefits to offset the overdraft charges. The court disagreed and stated the any consent to use the SS benefits must be "knowing, affirmative and unequivocal" to be valid. People do not have to agree to allow a creditor or other person to use their SS benefits for a debt.
In conclusion the Court held:
Washington Mutual's practice of using directly deposited Social Security and SSI benefits to offset overdrafts and overdraft charges runs afoul of 42 U.S.C. § 407(a) & 1383(d)(a) because there was no "knowing, affirmative and unequivocal" consent by the plaintiffs to such practice. The district court correctly concluded that the plaintiffs' state law claim under California Civil Procedure Code § 704.080 is expressly pre-empted by OTS regulations because it would impose requirements on various deposit-related activities of a federal savings institution. Plaintiffs state law claims for violation of California Business and Professions Code § 17200 and conversion, however, do not impose any requirement on such activities and merely provide additional remedies for the federal law violation. These claims fall within the express exceptions of Section 557.13 and are not preempted.
In addition to the Federal Claims for violation of Federal Law, the Court also let proceed State claims based on conversion and unfair business practices. There may be other applicable actions as well.
In your case there are no statements about why the bank took the SS benefits or part thereof. You should contact a local or other qualified attorney for assistance.
