Taisha Simon had heard about people stealing federal money given to families to buy groceries, but she never thought she’d be one of the victims.
It happened last June when the 42-year-old mother received $939 in US food aid for herself and her four children and went out for her big monthly shopping spree.
As it turned out, her weak spot was her government-issued plastic debit card, which relied on outdated technology: The government uses Electronic Benefit Transfer (EBT) cards to issue food and cash assistance, and cardholders use them to pay for groceries at the point of sale.
When Simon went shopping at her local Aldi, she had a cart full of canned goods and vegetables but nothing left on her card. She paid what she could out of her own pocket, but it was nowhere near what her family needed.
“My five-year-old has autism and my 17-year-old has ADHD, ODD and food allergies so he was crying every day,” said Simon, who works as an assistant manager at a retail store. “I couldn’t feed my kids the food they were used to.”
A sign at a grocery store in Oakland, California, indicates that they accept Electronic Benefit Transfer (EBT) cards. (Justin Sullivan/Getty Images) (Justin Sullivan via Getty Images)
Unfortunately, Simon’s experience is not uncommon — it’s part of a growing trend of identity theft targeting the 42 million low-income Americans who rely on EBT cards to receive government food and cash assistance.
“This is a really egregious crime,” said Justin King, policy director for Propel, which provides a free mobile app for EBT cardholders. “You’re stealing money from these people, damn it. This is a devastating blow to people who are already struggling.”
“Lack of incentives”
The ways to protect yourself from this type of theft are simple and common with regular debit and credit cards — but you must be willing to do it.
“There’s no benefit to making improvements for people who use the EBT system,” King said. “Unless Congress acts, we’re not going to see progress and modernization of the system.”
EBT cards, which provide assistance for the Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF), and other state-run assistance, function like a debit card when buying groceries at stores or withdrawing cash at ATMs.
But these cards lack a key security feature found in the debit and credit cards we use every day: a tiny computer chip that is nearly impossible to replicate.
Instead, EBT cards rely on an old-fashioned magnetic stripe for security: that stripe contains all the information to clone the card, and when you swipe it at a store or ATM, that data can be read by an illegitimate card reader rather than a legitimate one.
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EBT cards also lack other security features commonly found on debit and credit cards, such as the ability to lock and unlock the card, check real-time balances or receive transaction alerts.
“The system lacks incentives to provide first-class financial services,” King said.
The back of a New York State welfare card. (Yahoo Finance)
“Overwhelming”
Lacking safeguards, EBT cards have been a particularly attractive target, and the increased assistance distributed through these cards during the pandemic has made it even more lucrative for thieves.
Once they had the counterfeit cards, the fraudsters used them to withdraw cash aid from ATMs or buy popular food items like baby formula to resell, and some even hired accomplices to make fake purchases at stores from which they funneled the funds.
The panic buying of EBT cards became so severe that the federal government implemented a temporary refund program that expired at the end of September. According to the USDA’s Stolen Benefits Dashboard, the government has reimbursed about $62 million in stolen benefits.
But a Propel survey released this month found that 36% of EBT theft victims never applied for compensation, half of whom had no idea about the program, and 19% were denied benefits, including Taisha Simon.
“I was told there would be no refunds,” Simon said when calling a local human services agency.
As a result, Simon had to make some tough choices: She would cut back on her hours to avoid paying tolls and gas to commute from her home in North Philadelphia to her store in New Jersey (public transportation wasn’t reliable enough to get her to work on time), and she also had to decide how much she would and wouldn’t be paid that month.
“You’re either leaving your phone on and having no food, or you’re without electricity, gas and water, or you’re paying full price and have no food,” she said, “so we’ve had to cut everything in half.”
Propel’s research found that more than half of victims of EBT theft were forced to skip meals or eat less, while 44% had to borrow money or go into debt. All told, it took Simon four months to financially recover from the theft.
“I was overwhelmed,” she said.
Last summer, Taisha Simon was the victim of EBT theft, in which scammers steal government food assistance payments from an old debit card. (Photo by Taisha Simon)
“I’d rather have that security.”
There is some hope that as Congress considers the 2024 Farm Bill, there will be discussions and possible changes that could provide an opportunity to improve the EBT program. (The USDA oversees the SNAP program.)
For example, Congress could extend the rebate program and mandate and fund chip cards, King said. If left up to the states, some might refuse to switch over because of the costs of switching to chip cards. That would create an environment in which thieves would flock to states that don’t tighten EBT security.
“If you don’t do it everywhere, you’re just squeezing a balloon,” he said.
Additionally, Congress should allocate funds to improve the entire EBT infrastructure to function more like everyday banking, giving EBT users access to their balances and transaction history “with absolute certainty down to the penny, down to the minute,” and allowing them to lock their cards electronically or by phone, King said.
Simon wholeheartedly supports these improvements. For her, it seems like a no-brainer: she already uses the lock feature on her bank cards.
“I hate having to keep calling, but it’s a security issue and I don’t have time to get robbed again and again so I’m grateful,” she said.
“Safety is better than no safety.”
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Jana Herron is a senior columnist for Yahoo Finance. Follow her on Twitter. Jana Herron.
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