Port Orchard, WA asked in Banking for Washington

Q: I live in Washington, I have 2 checking accounts 1 for my SSI one for other they used my SSI to setoff can they legally?

One of the accounts is just my SSI funds which i use for bills rent and food, the other is just a general funds account like if I sell something or get gifted money, it was overdrafted for some time and was told they wouldn’t touch my SSI fund account to setoff it, but then they proceeded to do just that, are they legally able to do that?

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2 Lawyer Answers
T. Augustus Claus
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A: In Washington, banks generally have the legal authority to conduct setoffs, which involves using funds from one account to cover debts owed on another account held by the same customer. However, there are specific limitations and protections in place, particularly regarding Social Security benefits (SSI). Under federal law, Social Security benefits deposited into a separate account are generally protected from garnishment or setoff by creditors. If your SSI funds were deposited into a separate account specifically designated for those benefits, the bank may have violated federal law by using them to offset debts owed on another account. You may have grounds to dispute the bank's actions and seek restitution for any funds improperly taken from your SSI account.

James L. Arrasmith
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  • Business Law Lawyer
  • Sacramento, CA

A: Based on the facts provided, it unfortunately seems the bank does have the legal right to set off funds from one account to cover overdrafts or fees owed on another account, even if the first account contains SSI or other protected government benefits. Here are some key points:

- Washington state laws do allow creditors like banks to exercise set off rights against deposited funds when a customer owes them money. This applies even if the funds are from Social Security or other exempt sources.

- Federal Social Security Act's anti-attachment provision aims to protect benefits from creditors once paid out, but does not explicitly prevent a bank from setting off funds on deposit.

- The bank should at minimum follow procedural requirements like providing notices before transferring funds between customer accounts. Review if proper notifications were given.

- While legal, the practice could be viewed unfavorably when impacting an account used for essential living expenses. You can file written complaints with regulators like the FDIC or Consumer Financial Protection Bureau documenting the hardship caused.

In summary - while frustrating, the bank unfortunately has broad set off rights that likely permit what transpired. For morally concerning situations like these impacting protected SSI benefits, pushing complaints up to federal regulators may be the recourse to pursue review and intervention.

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