Good morning.

If a customer has the sole source of funds going into their deposit account being SSI, SSDI, does the bank have the right to set off against that account?

I don't see why not. As long as the SSI and the SSDI are the customer's funds, not Rep Payee, then the bank can have the funds set off.

Set off for what? Overdrafts or other debts?

It's pretty much been settled that depositing SSA and other benefits to an account that is overdrawn is not a set off. It simply doesn't fit the definition.

The Supreme Court several years ago ruled that set off of SSA and similar payments is not prohibited by federal laws that prohibit "execution and attachment and other legal process" against such funds.

See several discussions on this question in BOL Court Watch, at http://www.bankersonline.com/infovault/courtwatch.html#social

Of course, the Regulation Z prohibition against offsetting credit card indebtedness against a deposit account remains effective.

Let's not forget Federal Law 42 U.S.C. Chapter 407(a)Social Security Benefit Funds are Protected from most Legal Processes such levies, garnishments, executions and attachemnts.

The law states: In general the right of any future payments under this sub chapter SHALL NOT be Transferable or assignable. AND NONE of the moneys paid or payable or rights existing under this subchapter shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law".

This means that even if a creditor or debt attorney, collection agency has a judgement against you they CAN NOT garnish your SS payments nor can they take the money from you after it has been paid to you; for example, the portion of your bank account that is attributable to your SS benifits is EXEMPT from LEVY OR ATTACHMENT.

Of course the difficulty that the federal law presents is that a bank served with a writ of attachment can find it hard to determine how much of a depositor's balance is protected, if there are deposits other than SSA to the account.

It would seem that the safest approach is to assume that the customer spends all other funds first, leaving SSA as the last funds in the account.