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SNAP fraud in California

June 24, 2023

And you thought California’s $32 billion in Employment Development Department (EDD) fraud was bad.

A small group of criminals in Detroit has managed to pilfer the SNAP (Supplemental Nutrition Assistance Program) benefits of nearly 8,000 impoverished California families who were shocked when they discovered their EBT cards had been drained. The criminals stealing access to EBT cards run the gamut from low-level organized criminal gangs in Michigan to criminal syndicates as far-flung as Romania journeying to California, specifically to exploit the gaping security flaws in the SNAP program.

So how is it that they managed to siphon off EBT card numbers and pins with alarming ease? First, the United States Department of Agriculture, which implements the SNAP program, has no incentive to prevent fraud. Like the EDD debacle, these bureaucrats seem completely content to just shovel money out the door with no regard for consequences.

Even worse, in recent federal litigation, it was revealed that retailers who accept SNAP/EBT benefits are not obligated to employ advanced point-of-sale systems, the type that generates transaction records in standard grocery stores. In fact, a fraudster could become an EBT retailer by purchasing a point-of-sale terminal on the dark web that’s linked to an “approved” retailer. This system has so few guardrails and fraud-detection tools in place that thousands of EBT cards from California were used in a single Michigan city with no “red flags” alerting anyone as to what was happening.

Consider the magnitude of these losses. SNAP boasts an annual budget of a staggering $127 billion. If estimates suggesting that 20% of this amount is lost to fraud are anywhere close to being accurate, it means $33.4 billion vanishing into thin air every year. Rather than deploying those billions toward helping America’s most needy families, SNAP is in fact one of the largest funders of organized criminal groups in the world.

The lack of fraud detection and prevention technology within the USDA’s SNAP program places an enormous burden on law enforcement as well— as they need to divert significant resources at the federal, state and local level to investigate and hold these groups accountable.

To restore integrity to our public assistance programs taxpayers should demand the immediate implementation of front-end identity verification, advanced point-of-sale systems that generate transaction records, mandating the collection of transaction-specific geolocation information, and enforcing rigorous security standards for EBT transactions. To make this happen, we must upgrade the technology of EBT cards to include chips, similar to that on credit cards. This will make it much harder for criminals to skim data. Secondly, merchants should be required to collect data during transactions. The lack of a paper trail makes it nearly impossible to trace fraudulent activity. Thirdly, we must institute identity verification and eligibility determination requirements. SNAP must be easy to access for those who need it, but impossible to access by criminals.

This issue is more than just a financial matter; it’s a moral one. It’s time to demand that our political leaders and agency heads not only take notice but take decisive action. They must initiate and enforce measures to secure the SNAP program and to ensure that public funds fulfill their intended purpose: to assist those who need them most.

Jon Coupal is the president of Howard Jarvis Taxpayers Association and Haywood Talcove is the CEO of the Government Group of LexisNexis Risk Solutions.

Orange County Register

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SNAP fraud in California

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