Social Security – assignment

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United States Court of Appeals For the Seventh Circuit

Civil

Social Security — assignment

Spending money with a source in Social Security benefits is distinct from assigning the benefit stream itself.

“If using Social Security benefits to fund payments on a debit card were treated as an ‘assignment’ of those benefits, then merchants would fear that payments would be reversed, even if the bank authorized the transaction when it was made. (An electronic interbank network authorizes debit-card transactions only if the linked account has the funds to cover the payment, and credit-card transactions only if the customer has enough remaining in the card’s credit line.)

This would induce merchants to take precautions. They might ask customers whether they receive Social Security benefits and, if the answer is yes, require payment in cash. DISH might require a cash deposit equal to the termination fee, instead of accepting authorization to use a debit or credit card. (This would be equivalent to a security deposit when leasing an apartment.) It might insist that customers prepay for the antenna and other gear, eliminating the 2-year service commitment. (It offered Townsel this option; she turned it down.) Or DISH might charge Social Security recipients extra—or conceivably refuse to deal with them at all. That’s if recipients could be identified. People might balk or lie when asked ‘do you receive Social Security benefits?’ Section 407(a) does not contain an exception for recipients who deceive merchants about the source of their funds. If all debit and credit transactions became less reliable, prices would rise, because bad debts would increase and merchants have to cover their costs. It is hard to see how Social Security recipients could be helped by a rule that would lead merchants to demand cash deposits, raise prices, or refuse to deal with Social Security recipients at all.”

Affirmed.

11-2827 Townsel v. DISH Newwork, L.L.C.

Appeal from the United States District Court for the Northern District of Illinois, Guzmán, J., Easterbrook, J.