Yahoo Finance Criminals are stealing food money from poor Americans by exploiting obsolete debit cards
Taisha Simon had heard of people stealing money the federal government gives families to buy groceries, but she didn't realize she would become one of their victims.
It happened last June when the 42-year-old mother headed out for the big shop she does at the beginning of each month after getting $939 in US food aid for her and her four children.
Her vulnerability, as it turns out, was a plastic, government-provided debit card that relies on outdated technology. The government uses Electronic Benefits Transfer (EBT) cards to issue food and cash assistance, and cardholders use them at the point of sale to pay for groceries.
When Simon checked out at her local Aldi's, her cart full of canned food and vegetables, nothing was left on her card. She paid for what she could out of pocket, but that fell far short of what her family needed.
"I cried every day because my 5-year-old has autism and my 17-year-old has ADHD and ODD and they have food sensitivity," said Simon, who works as an assistant manager at a retail store. "I wasn't able to feed them the way they were normally used to eating."
Simon's experience, unfortunately, isn't uncommon. It's part of a growing trend of identity theft targeting the 42 million lower-income Americans who rely on EBT cards to receive their government food and cash assistance.
"This is a really crummy crime," said Justin King, policy director at Propel, which provides a free mobile app for EBT cardholders. "You're stealing this money from these people, my heavens. This is devastating for folks who are on the edge already."
'Lack of incentive'
The ways to safeguard against this kind of theft are simple and mainstream among regular debit and credit cards — as long as there is the will to implement them.
"There's no profit to be had by doing better for folks in the EBT system," King said. "Unless Congress acts, we're not likely to see progress and modernization in the system."
EBT cards — which deliver Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF), and other state-run assistance — work like debit cards at stores when buying groceries and at ATMs when withdrawing cash.
But they lack a crucial security feature that everyday debit and credit cards carry — a small computer chip that is nearly impossible to clone.
Instead, EBT cards depend on the old-school magnetic stripe for security. The stripe contains all the information to clone the card, data that can be picked up by an illegal card reader over a legitimate one at a store or ATM when a card is swiped.
EBT cards also lack other security features commonly found on debit and credit cards, such as the ability to lock and unlock a card, check real-time balances, and receive transaction alerts.
"There is a lack of incentive in the system to deliver first-class financial services," King said.
'Beyond overwhelmed'
The lack of protections makes EBT cards a particularly easy target. They became even more lucrative to thieves when enhanced aid was distributed through these cards during the pandemic.
Once they had a cloned card in hand, the fraudsters simply withdrew any cash assistance through ATMs or spent money on in-demand groceries like baby formula that they could resell. Others made sham purchases at stores that employed accomplices to drain the funds.
The run on EBT cards got so extreme that the federal government instituted a temporary reimbursement program that expires at the end of September. According to the USDA’s Stolen Benefits Dashboard, the government has replaced almost $62 million in stolen benefits.
But 36% of EBT theft victims never filed for replacement benefits because half of them didn't know about the program at all, a survey released this month from Propel found. Another 19% were denied reimbursement — including Taisha Simon.
"They said they didn't do reimbursements," Simon said when she called her local benefits agency.
As a result, Simon had to make some tough choices. She cut back her hours at work so she could avoid paying for tolls and gas traveling from her home in north Philadelphia to the store in New Jersey. Public transportation wasn't reliable enough to get her to work on time. She also had to decide what got paid and what didn't that month.
"It's either keep your phone on and don't have food. It's short the electric, the gas, and the water or pay in full and have no food," she said. "So everything had to be cut in half."
Propel found that over half of EBT theft victims were forced to skip meals or eat less, while 44% had to borrow money or go into debt. All in all, it took Simon four months to recover financially from the theft.
"I was beyond overwhelmed," she said.
'I'd rather have that safety'
There is some hope that changes can be made as Congress takes up the 2024 farm bill, discussions that offer an opportunity to improve the EBT program. (The US Department of Agriculture oversees the SNAP program.)
For instance, Congress could extend the reimbursement program, require chip cards, and provide the funding, King said. If left to the states, some states may balk at the cost of converting to chip cards and decline to do so, creating an environment where thieves flood the states that don't upgrade their EBT security.
"If you don't do it everywhere, you're just squeezing a balloon," he said.
Additionally, Congress should earmark funding to improve the entire EBT infrastructure to operate like an everyday bank, allowing EBT users to access their balances and transaction history "to the penny and to the minute without fail," King said, and to lock their cards electronically or by phone.
Simon wholeheartedly agrees with these improvements, which, to her, seem obvious. She already uses the locking feature on her bank cards.
"I hate it because I always got to keep calling over and over again, but it's a security thing and I appreciate it because I don't have time to keep getting robbed," she said.
"I'd rather have that safety than have no safety."
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Janna Herron is a Senior Columnist at Yahoo Finance. Follow her on Twitter @JannaHerron.
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