Even though 95% of Americans have heard of or read about identity theft, a new survey shows that many don't know the difference between direct deposit and paper checks when it comes to security. This puts them at a higher risk for identity theft and fraud.
The U.S. Department of the Treasury and the Federal Reserve Banks are paying for the survey. It is the latest Go Direct public service project. Go Direct wants people who get their Social Security by paper check to switch to direct deposit, which is safer and easier.
Even though direct deposit has been around for more than 20 years, 40 percent of Americans do not use it, according to the survey.
The Treasury says that direct deposit is the best way for people to get federal benefits. Direct deposit keeps people from losing or having their checks stolen. It also cuts down on fraud, protects people from identity theft, and gives them more control over their money. Plus, direct deposit gives people access to their money right away from almost anywhere.
The survey also found that many Americans don't know how to protect their money and identities. Some common misconceptions about direct deposit and paper checks are:
MYTH: Of the people surveyed, 62% said that a paper check with your name on it can only be cashed if you sign it or endorse it.
Checks can be forged, and some of them are easier to do so than others. When payments come in the mail, they are more likely to be stolen or forged.
MYTH: Nearly half of the people surveyed said that direct deposits of payments like wages, salaries, or government benefits go through the Internet.
FACT: Direct deposit puts money directly into your bank account. This is done through a highly secure electronic banking system, not the Internet. It is the same system that is used by the biggest banks in the world.
MYTH: Almost 40% of people who answered said "false" when asked if a direct deposit has ever been lost or stolen.
FACT: The direct deposit system keeps track of transactions so that payments can be tracked. This makes it easy to fix problems, which are very rare. It's also true that there are 30 times more problems with checks than with direct deposits. In 2004, people forged endorsements on more than 70,000 checks that the Treasury had sent out. More than $61 million was written on these checks.
These are all reasons why the Treasury and the Federal Reserve Banks are encouraging people who receive Social Security and other federal benefits to use direct deposit-the safest, easiest way to get payments. With direct deposit, people can be sure that their money will always be in their checking or savings account on their pay day.
