The Biden administration recently began issuing payments to eligible applicants under the Inflation Reduction Act’s Discrimination Financial Assistance Program. The payments—which are intended to provide financial assistance to farmers, ranchers and forest landowners—are for discrimination that occurred under the USDA’s Farm Service Agency Direct Farm Loan Program through 2021. Due to the increase in check fraud currently experienced by banks, depository institutions need to be aware of the program and how to go about validating the checks.
Treasury checks are among criminals’ favorite targets because generally banks must provide the money before they can learn if the check is not valid or stolen, and it has been reported that they are actively targeting the USDA checks. Additionally, due to the high levels of fraud with Treasury checks, it is recommended that banks only cash Treasury checks for existing customers whose accounts are at least one year old.
More than 43,000 individuals will receive payments. Congress allocated $2.2 billion, and recipients include more than 23,000 people who have or had a farming or ranching operation, who are receiving between $10,000 and $500,000 of assistance, with an average of nearly $82,000. Recipients also include over 20,000 individuals who planned to have a farming or ranching operation, but reported they were unable to do so because they couldn’t get a USDA loan. They are receiving between $3,500 and $6,000 of assistance, with an average of $5,000.
Paper checks were issued beginning Aug. 2. There is reference code in the memo line of the check, which can be used to identify a check as part of these payments. All aspects of the checks except for the name can be verified by the Treasury Department. For verification of the name, a financial institution can call (800) 721-0970. By providing the information on the check, the DFAP call center will confirm the validity of the payment.
