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Go Direct Campaign Successfully Recruiting Direct Deposit Users

Sunday, January 1, 2006

Since 2004, the Federal Reserve and the U.S. Department of the Treasury have been urging Americans to Go Direct with a new campaign to motivate recipients of Social Security to use direct deposit. So far, their efforts have been successful.

Under the Go Direct campaign, more than 600,000 people have switched from using paper checks to direct deposit for Social Security. The St. Louis Fed's Memphis region participated in the pilot program in 2004-05; the program went nationwide in 2005.

Direct deposit isn't exactly brand new. The government and private sector have been offering electronic payroll transfer for years. So why would the Fed and the Treasury be making a big deal over an "old" service?

There are several reasons. First, there is the money factor. "The Treasury spends $.77 more to issue a check compared to a direct deposit payment," says Kathy Paese, vice president of the St. Louis Fed's Treasury Relations and Support Office. "With 150 million checks issued each year, direct deposit means a potential savings of $120 million. And with the first baby boomers scheduled to retire beginning in 2008, it is increasingly important that we reduce the number of paper Treasury checks to reduce costs and save taxpayer dollars."

From the Social Security beneficiaries' point of view, the convenience of knowing your money is in your account is important: For example, after Hurricane Katrina, more than 85,000 people were stranded without their Social Security or federal benefits checks and needed emergency payments, according to the Treasury. But those who already were using direct deposit had immediate access to their funds from virtually anywhere.

Perhaps most important is security. Direct deposit is a deterrent to identity theft and the possibility of stolen checks. "Direct deposit eliminates the risk of stolen checks and helps protect people from identity theft. You are 30 times more likely to have a problem with your paper federal benefit check than with direct deposit," says Paese.

Go Direct success comes through partnerships

Even though four out of five people who receive federal benefits checks already use direct deposit, there are holdouts. That's where local partnerships come in.

Martha Perine Beard, the St. Louis Fed's Memphis senior branch executive, has been involved from the beginning. She explains that the Fed and Treasury haven't been promoting Go Direct by themselves; national and local organizations, including banks, have been the primary reasons for success. Currently, Go Direct works with about 700 partners, including some in the Memphis area. "The Treasury and Federal Reserve banks are collaborating with groups that recipients know and trust-community organizations, faith-based groups, law enforcement, government and local banks-to encourage more people to convert their benefit payments to direct deposit," she says.

"In Memphis, many groups have already accepted the challenge to promote the benefits of direct deposit. For example, the Aging Commission shares information with the public about Go Direct through their Information and Assistance Hotline. And the Memphis Police Department is a strong advocate for direct deposit because it is safer for Social Security recipients and helps to prevent criminal activity," says Perine Beard.

The Go Direct campaign goal is to exceed 1 million sign-ups in 2007. For more information or for how your bank can get involved, visit