Criminals Exploit Outdated Cards to Steal Government Benefit

An integral component of the expanding identity theft practice that targets the 42 million Americans with lower incomes who depend on EBT cards to access government food and cash assistance.

As long as there is a desire to put them into practice, there are common, easy-to-implement methods for protecting standard debit and credit cards against this type of fraud.

EBT cards function similarly to debit cards in grocery shops and ATMs for cash withdrawals. They are used to access state-run aid programs such as Temporary aid for Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP), and others.

However, they are devoid of a vital security element found on regular debit and credit cards: a tiny computer chip that is exceedingly difficult to counterfeit.

EBT cards rely on the antiquated magnetic stripe for security instead. When a card is swiped at a store or ATM, an unauthorized reader can access the data contained in the stripe, which can be used to copy the entire card.

Other security features that are often included on debit and credit cards-like the capacity to lock and unlock a card, view real-time balances, and get transaction alerts-are also absent from EBT cards.

Security Gaps in EBT Cards

EBT cards are particularly vulnerable due to their lack of security measures. The extra help that was delivered through these cards during the epidemic made them even more profitable for thieves.

Once the fraudsters had a cloned card, they would simply use ATMs to withdraw any available cash or use the money to purchase in-demand items, such as baby formula, which they could then resale. Others went to stores and made fake purchases, using accomplices to embezzle the money.

Because of the unprecedented demand for EBT cards, the federal government launched a short-term compensation scheme that ends at the end of September. The government has restored about $62 million in benefits that were stolen, according to the USDA's Stolen Benefits Dashboard.

However, according to a Propel poll published this month, 36% of victims of EBT theft never applied for replacement benefits since half of them were unaware of the program at all.

There is a chance that the 2024 agriculture bill, which Congress will be debating, would bring about improvements to the EBT program. (The SNAP program is managed by the US Department of Agriculture.)

Congress, for example, may mandate chip cards, prolong the compensation scheme, and supply the money, according to King. If it were up to the states, some would refuse to switch to chip cards because of the associated costs, which would encourage criminal activity in the states that haven't improved their EBT security.

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