We have several customers that receive direct deposit funds from Social Security, but it typically only covers their overdraft. Once the overdraft is covered they then end up back in the red by mid month.

What are you doing to help educate your customers? If have also read that we can not use government funds to cover the OD, but how can we stop it, if it is direct deposit.

You cannot exercise setoff rights against government benefits meaning you cannot transfer funds from an account that receives benefits to cover another. There are no prohibitions against applying a the direct deposit to the overdrawn balance of the account to which the deposit is posted.

There is no prohibition for a SSA deposit to cover previous overdrafts. That was settled a long time ago. Someone needs to reach out to the customer and see if there is a better solution for them.