Social Security services at risk as DOGE bulldozer continues

The Social Security Administration is eliminating phone-based service for changing direct-deposit account information, directing beneficiaries to make those updates online or in person at a field office starting March 29.

The agency says the change is aimed at reducing fraud, but critics argue it will create additional hardships for retirees and people with disabilities.

In a statement, the SSA said the decision was based on an internal review of security vulnerabilities.

“Approximately 40 percent of Social Security direct-deposit fraud is associated with someone calling SSA to change direct-deposit bank information. SSA’s current protocol of simply asking identifying questions by telephone is no longer enough to prevent fraud,” the agency said Wednesday.

The decision comes as the Social Security Administration undergoes a major restructuring, including reported plans to cut as many as 30,000 employees and reduce the number of regional offices from 10 to four. The changes have drawn scrutiny from advocacy groups that argue the system is already overburdened and that additional barriers to service will disproportionately affect vulnerable populations.

Richard Fiesta, executive director of the Alliance for Retired Americans, blasted the move, saying that telephone service remains a crucial access point for many seniors.

“For the 70 million seniors, survivors, and people with disabilities who receive Social Security every month, access to Social Security services by telephone is essential,” Fiesta told MarketWatch on Wednesday. “Forcing beneficiaries to visit field offices – which are already understaffed and being closed – or navigate an online-only system will create unnecessary barriers and hardships for those who need assistance the most.”

Fears of system-wide failures

The broader restructuring at the Social Security Administration has raised alarms among former agency officials and policy experts, who warn that deep staffing cuts could result in significant service disruptions.

Martin O’Malley, who previously led the agency under the Biden administration, expressed concern that the loss of experienced personnel could leave Social Security’s technology infrastructure vulnerable. In an interview with CNN, he predicted that critical failures could occur within months.

“Everything they’re doing is driving this agency to system collapse,” O’Malley said. “It will lead to interruptions in service, and that will ultimately cascade into more frequent system interruptions for the processing of claims, ultimately leading to system collapse and eventually the interruption of benefits.”

In a separate interview with CNBC, he urged those already receiving benefits to "start saving now" as he believes the SSA will be crippled "within the next 30 to 90 days."

The agency's restructuring is being overseen by acting commissioner Leland Dudek, though internal concerns have emerged over the extent of his control. Speaking to CNN, an attendee at a recent agency meeting said Dudek acknowledged that key decisions were being made externally.

“People are coming in from the outside. They’re unfamiliar with the nuances of our agency,” the attendee quoted Dudek as saying.

The overhaul at SSA is happening amid a broader federal downsizing overseen by the Department of Government Efficiency, led by Elon Musk and endorsed by the Trump administration. Musk, who has called Social Security a “Ponzi scheme,” has been vocal about his concerns over fraud and inefficiencies in the system.

President Donald Trump has nominated Frank Bisignano to serve as the agency’s permanent commissioner, though he is still awaiting Senate confirmation.

SSA denies broader service cuts

Despite growing concerns, the SSA has pushed back against claims that its phone services are being broadly reduced. Responding to earlier reports that telephone-based claims processing could be eliminated as part of cost-cutting efforts, the agency said “all other SSA telephone services remain unchanged.”

In a statement to Barron’s Wednesday afternoon, the SSA disputed claims that the phone service changes were happening under the directionof DOGE, stating that only procedures for direct-deposit changes were being modified for security reasons.

While it remains unclear how staffing reductions will impact service quality, advocates argue any cutbacks could disproportionately harm older adults and people with disabilities. Even before the recent concerns around DOGE, advocates and policymakers had been grappling with the risk of the system collapsing into insolvency.

The Social Security Administration provides benefits to more than 73 million Americans, and any disruption to its operations is expected to draw close scrutiny.

With the agency in transition and its leadership under debate, the full extent of the restructuring’s impact remains uncertain.