To combat welfare fraud, states reach for debit cards

Forty states can now track where welfare recipients spend their

In their long-standing war on welfare fraud, states are now deploying a powerful high-tech weapon: the ATM card.

Indeed, welfare recipients in more than 40 states now swipe plastic cards to access their benefits - enabling agencies to monitor people's use and misuse of public aid.

But this electronic system, which by some accounts is saving taxpayers millions of dollars a year, is also raising a host of new concerns for welfare recipients. Among them: new fees, teller-machine errors, and perhaps most important, a loss of privacy that can result from tracking recipient purchases.

To be sure, electronic benefit transfer (EBT) removes the clutter and stigma of food-stamp coupons and welfare checks. Moreover, state officials say it saves money by eliminating paperwork and ferreting out fraud by recipients and unscrupulous stores.

"What [this system] brings to the table is incredibly well-documented audit trails," showing when and where recipients are spending their money, says Alfred Fuoroli, EBT project manager for Massachusetts.

But with this detailed financial tracking, "you expose yourself and your personal transactions to the state's welfare department," warns Allan Rodgers of the Massachusetts Law Reform Institute in Boston.

Jeanie Akamanti, a onetime medical researcher who is supporting two children on food stamps and Supplemental Security Income in Carbondale, Ill., says she feels "a real concern that they know when and where and how much I am buying." She adds, "It's really nobody's business."

In the effort to fight fraud many agencies are using EBT to keep tabs on recipients' out-of-state transactions, which are legal.

Shopping across state lines does not trigger suspicion, says Massachusetts' Mr. Fuoroli. But "if they are out of state for 15 days and they didn't tell us," he says, "we are interested in knowing whether the recipient should continue to receive benefits."

One woman's fight to keep benefits

Last year, Massachusetts proposed cutting a recipient's benefits after she used her card in New York several times over a two-month period. The state suspected she had moved and was collecting benefits illegally.

The woman ultimately kept her benefits, but "she felt chilled," says her attorney, Deborah Roher of Southeastern Massachusetts Legal Assistance. "I don't think she had realized before the hearing that they could trace where she was."

States tout EBT as a way to acquaint the poor with mainstream banking, but the new system also reveals clashes between the world of high-tech banking and the gritty realities of welfare.

EBT critics say the system has created new pitfalls for welfare recipients. Fees and surcharges, for instance, are causing some recipients to withdraw all their benefits at once - posing greater risk of theft, they say.

Many elderly or disabled recipients, finding the cards difficult to use, have dropped off welfare. When Philadelphia launched its program in May 1998, "we saw a modest tailing off by the hundreds," says Richard Weishaupt, a lawyer with Community Legal Services there.

Fewer consumer protections

Equally worrisome to advocates is the fact that recipients do not get the consumer protections afforded other bank cardholders: Welfare clients are exempted from laws that protect ATM and credit-card customers from unauthorized withdrawals or machine error.

"Nothing requires companies to even investigate these claims [brought by EBT users]," says Maryland-based EBT expert Barbara Leyser. Banks have 45 days to replace recipients' lost money due to error, compared with 10 days for regular cardholders.

"To impose electronic receipt of ... needed benefits and then revoke federal protection is unconscionable," Ms. Akamanti wrote in a letter to Health and Human Services Secretary Donna Shalala.

EBT officials such as Ohio's David Schwartz insist recipients are well-protected by confidential PIN numbers and can cancel a lost or stolen card. Furthermore, they say the cost of extending full protections to recipients would make EBT prohibitively expensive.

About these ads
Sponsored Content by LockerDome

We want to hear, did we miss an angle we should have covered? Should we come back to this topic? Or just give us a rating for this story. We want to hear from you.




Save for later


Saved ( of items)

This item has been saved to read later from any device.
Access saved items through your user name at the top of the page.

View Saved Items


Failed to save

You reached the limit of 20 saved items.
Please visit following link to manage you saved items.

View Saved Items


Failed to save

You have already saved this item.

View Saved Items