CLEVELAND — A new national report estimates that criminals are pocketing almost $400 million in taxpayer money each year by taking advantage of flaws in a federal safety-net program.
It’s a problem News 5 has been covering here in Northeast Ohio, amid rising reports of electronic benefits theft. Criminals are using high-tech skimming devices and other schemes to steal SNAP, or food-stamp, benefits from low-income families.
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Now a report from Propel, a tech company with a mobile app used by SNAP recipients, says the crime wave is much bigger than the official statistics indicate.
The U.S. Department of Agriculture says that EBT theft has cost taxpayers more than $220 million over the last two years. That's based on victims' requests for reimbursement, through a federal repayment program that recently ended.
But Propel found that 39% of victims didn’t file paperwork for reimbursement. Many of them didn’t realize there was a way to get their money back.
The federal reimbursement program lapsed in December, after Congress left it out of a stopgap spending bill to avert a government shutdown. At the same time, food-stamp theft reports were soaring in Ohio and across the country, according to federal data and Propel’s customers.
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The company believes that EBT theft is now a nearly $400 million annual problem.
That’s a small number relative to the federal government’s overall spending on SNAP, which approached $113 billion in 2023. But the losses are still significant – and particularly harmful to parents of young children, disabled people and the elderly, who are struggling to put food on the table.
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“EBT cardholders need – and deserve – systemic solutions,” said Toral Patel, senior manager of policy and partnerships at Propel. “Not just work-around solutions.”
Propel says that 25% of SNAP recipients use its free app, which is supported by advertisements from grocers and other retailers. The company surveyed 11,985 users last month, including more than 2,500 theft victims. Some of them were in Ohio.
“I had to look for help everywhere that I could for free food for the month,” one Ohio victim wrote in a survey response. “I was devastated that something so terrible like this had happened. … They wiped me clean of $483.”
The Ohio Department of Job and Family Services and its county-level counterparts have been sounding the alarm about EBT theft and ways that customers can try to protect themselves. Meanwhile, advocates are urging government agencies and private vendors to upgrade EBT cards, which only have a basic magnetic stripe for swiping at store checkouts.
“EBT cards just don’t have the same protections as bank cards,” Patel said. “That’s a real problem. … It’s easy to steal from them.”
Last week, a bipartisan group of Ohio House members introduced a bill to upgrade the state’s EBT cards to include security chips, the tiny microchips that are on every credit and debit card in your wallet. The legislation would set aside $5.3 million for the project as part of the next state budget, allowing for a two-year rollout of the new cards.
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The USDA would match the state’s investment, bringing the total cost of the project to $10.6 million. Only a few states have made similar moves to migrate to more secure chip- and tap-payment technology. Others are waiting for the federal government to require the upgrades – and pay the full bill.
In its recent survey, Propel found that 62% of its users are worried about EBT theft. And 89% of them have been trying to protect themselves. But defenses are uneven across the country. And people don’t always know what they’re supposed to do.
In some states, including Ohio, cardholders can temporarily lock their accounts to block transactions. However, many of the EBT theft victims News 5 interviewed over the last year were unaware of how to do that through ConnectEBT, the state-approved mobile app.
An agent with the Ohio Investigative Unit, which handles food-stamp fraud cases, recently told News 5 that the ConnectEBT app is “highly underutilized.”
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Patel said Propel is working to add a card-locking feature to its app. The company has tested the technology in two states so far – California and Oklahoma – and hopes to make that option more widely available by working with other states.
“We are focusing on making that possible in the spring, including in Ohio,” she said.
But card-locking technology, on its own, isn’t enough.
“It requires the customer to take action,” Patel said. “Which is a burden, right on top of the other burdens that they’re already managing. So we believe that the solution should including continuing to build and enhance customer-facing tools like card-locking, out-of-state transaction blocking and transaction alerts. But it also needs to include shoring up EBT payment systems to bring them on par with the commercial sector.”
Nearly a third of the theft victims who responded to Propel’s survey said they’ve lost confidence in the government. Some cardholders are so worried about being skimmed or scammed that they avoid certain stores and avoid online shopping.
Propel found that most victims lost at least $250. Forty-six percent of them had to borrow money or take on debt to make ends meet.
“They’re already vulnerable,” Patel said. “And their money or their benefits for food is being drained. That’s just an abhorrent crime, I think. Making sure that the most vulnerable members of our community have the resources they need to exist, I think, is really important – and something that everybody should care about.”
